LONDON (Reuters) – The United States announced a record-size release of emergency crude reserves in March without consulting partners at the International Energy Agency, sending it scrambling to match its own releases, according to two people familiar with the matter. Subject.
Unilateral action by Washington to address global supply or price issues threatens to undermine the United States’ relationship with the International Energy Agency, the world’s energy watchdog that normally oversees international releases of emergency stocks, and could raise questions about the group’s continued importance.
The Paris-based International Energy Agency, which includes 31 mostly industrialized nations, was established after the 1973 oil price shock to ensure its members’ continued energy supplies in the event of an embargo, war or devastating storm.
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Members of the group have become concerned that US President Joe Biden is using the Strategic Petroleum Reserve (SPR) to curb rampant domestic inflation for political reasons, rather than protect consuming countries from global supply disruptions, according to the sources, who asked not to be identified. Because of the sensitivity of the subject.
“The IEA was embarrassed by the (US) release, which was initially made unilaterally by the US,” a source familiar with the diplomacy said about the release.
“The common understanding of IEA members is that we should cooperate as a whole,” said another source, this one from an IEA member country, who said the US announcement came as a surprise.
The IEA told Reuters it had been in close contact with all member states, including the United States, in the lead-up to my announcement of this year’s share issue. procedures.”
The US Energy Department said the US had been in “frequent contact” with the IEA and its member states about energy security prior to the announcement, but emphasized that its decision to release the oil was “independent” of the IEA.
He did not comment on whether the United States shared in advance the timing and size of its release.
“The United States and other IEA member states can and can, independently, release oil from their strategic reserves separately from any IEA collective action,” the department said in a statement to Reuters.
The White House did not immediately respond to a Reuters request for comment.
The dispute is the US announcement on March 31 that it would release 180 million barrels of Strategic Petroleum Reserve at a pace of 1 million barrels per day to cut high global energy prices and address cutbacks in Russian oil supplies since its invasion of Ukraine in February. Read more
The sources told Reuters that Washington had not told the IEA or its members that the announcement was coming – a break with previous precedent – and that the record volume, which is three times larger than any previous release of the Strategic Reserve, was a surprise.
The US announcement came a day before members of the International Energy Agency meet to discuss a coordinated release. After the meeting, which was chaired by US Energy Secretary Jennifer Granholm, the IEA announced that a coordinated release had been agreed but did not provide any details on the quantities.
At that point, the watchdog leadership began bilateral meetings with other members to pool the contributions together, according to the two sources. After a week of diplomacy, it secured commitments from its non-US members to release another 60 million barrels combined. [nL2N2W41DP]
However, the 60 million barrel figure was relatively small. According to the rules of the International Energy Agency, a member state’s contribution to the HEC must roughly match the proportion of its oil consumption within the group.
With the United States accounting for about half of the consumption among members, the IEA’s contribution was supposed to roughly match the United States’ lot.
“It was not possible. It was impossible as no one had such stockpiles,” the source familiar with the diplomacy said.
“The optics of the version that are made 75% in the US and 25% in the rest of the world are simply exotic,” the source added.
The IEA announcement highlighted the mismatch, detailing the release of 120 million barrels, 60 million of which came from the US in the first two months – effectively ignoring the fact that the US aims to keep the oil flowing for an additional four months.
The Biden administration’s release marks the second time in six months that it has signed a major withdrawal from the Strategic Petroleum Reserve without the blessing of the International Energy Agency.
In November, the United States pledged to release 50 million barrels to tame price hikes due to a sudden rebound in demand from the darkest days of the COVID-19 pandemic.
While some IEA members such as South Korea, Britain and Japan made contributions to this release, the agency itself sat down because it did not find any major supply disruptions to be addressed at the time.
After the Russian invasion, however, IEA member states saw fit to organize a coordinated release. On March 1, they announced the release of 60 million barrels – half of it from the US – to counter potential supply disruptions from Russia, the world’s leading oil and gas producer.
Biden’s Republican opponents criticized him for his move to release 180 million barrels of US stockpiles, arguing that the decision was political and should encourage domestic oil production instead.
Record high gasoline prices in the US are seen as a major weakness for Biden’s Democratic Party leading into the November midterm elections.
Biden has implemented a promise to phase out fossil fuels to help fight climate change, but his administration has been unsuccessful in imposing any restrictions on the industry and has urged drillers in recent months to speed up production to bring down prices.
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Reporting by Reuters offices. Editing by Richard Waldmanis and Margarita Choi
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