Nations agree to release 60 million barrels of oil, as Russia's invasion puts pressure on energy costs

All 31 member countries of the International Energy Agency have agreed to release 60 million barrels of oil from their strategic reserves "to send a strong message to oil markets" that there will be "no shortfall in supplies" as a result of Russia's invasion of Ukraine, the group said Tuesday.

The IEA board made the decision at an extraordinary meeting of energy ministers chaired by U.S. Energy Secretary Jennifer Granholm. Besides the United States, other members of the organization include Germany, France, the United Kingdom, Japan and Canada.

IEA members hold emergency stockpiles of 1.5 billion barrels of oil. The release amounts to four per cent of stockpiles, or roughly two million barrels per day for 30 days.

"The situation in energy markets is very serious and demands our full attention," IEA executive director Fatih Birol said. "Global energy security is under threat, putting the world economy at risk during a fragile stage of the recovery."

Russia plays an outsized role in global energy markets as the third-largest oil producer. Its exports of five million barrels per day of crude amount to about 12 per cent of the global oil trade. Some 60 per cent goes to Europe and another 20 per cent to China.

So far, U.S. and European sanctions have not barred oil or gas exports and have included exceptions for transactions to pay for oil and gas. Western leaders are reluctant to restrict Russian oil exports at a time when global energy markets are tight and high prices are fuelling inflation in developed economies.

But Russia's invasion has still shaken markets globally. Oil prices soared Tuesday, with U.S. benchmark crude surpassing $100 US per barrel — its highest price since 2014.

It's only the fourth time in history that the IEA has done a co-ordinated drawdown since the reserves were established in the wake of the Arab oil embargo in 1974.

From the U.S. perspective, the price of crude oil determines a big portion of what drivers pay to fill up their cars with gasoline. 

In November, U.S. President Joe Biden announced a release of 50 million barrels of oil in co-ordination with other energy-importing countries, but the measure had only a fleeting impact on oil prices, which have continued to rise.