The signal of strength leads the Allies to release oil reserves. But the price went up after the decision – The Observer

Oil reached $106 this Tuesday, even after the International Energy Agency (IEA) decided to head to its reserves to free up 60 million barrels.

The decision of the 31-nation international organization was issued for the first time since 2011, and on only four occasions the agency, created in 1974, jointly decided to go to its own reserves to release oil to the market – it happened in 2011, 2005 and 1991. After That the United States had already decided, in November, to release 50 million barrels of its reserves, which other countries, specifically European countries, did not follow, as they did not consider this necessary.

in the current situationThe IEA explains that it made the decision to “send a strong and united message to global oil markets that there will be no supply disruptions due to the Russian invasion of Ukraine”. Half of these reserves will be released by the USA. The 47-year-old Paris-based body has members, as well as the United States, Japan and several European countries.

The International Energy Agency says it supports sanctions against Russia, but expresses concern about the current market situation and price volatility. In addition, the Authority’s Executive Director, Fatih Birol, relayed in the statement welcoming the decision, adding that “the situation in the energy markets is extremely dangerous and requires our full attention. The security of global supplies is under threat, putting the global economy at risk at this time when recovery continues fragile.”

The members of the International Energy Agency have reserves of 1.5 billion barrels, which means that they release 4% of deposits, which is equivalent to two million barrels per day for 30 days.

Russia is the third largest oil producer after the United States and Saudi Arabia. In January of this year, Russian production reached 11.3 million barrels per day, while that of the United States was 17.6 million and the Saudis 12 million. Russia is the largest oil exporter and the second largest exporter of crude oil after Saudi Arabia. About 60% of oil exports go to Europe and 20% to China.

But after the announcement, Brent crude, traded in London and is a reference for Portugal, reached the markets at $106 a barrel and West Texas Intermediate crude in New York also reached that level, and the price was not contained by the action.

On Wednesday, there will be a meeting of OPEC + (a cartel of exporters led by Saudi Arabia and its ally Russia), with information that the organization will maintain its previous plan to start gradually increasing production. So the situation in Ukraine should not change the plans, ancestor to Reuters. OPEC+ decided to cut production in 2020 due to the pandemic crisis that suddenly reduced demand.

On February 2, at its last meeting, OPEC+ agreed to increase debt by 400,000 barrels per day starting in March, while maintaining a cut of 2.6 million barrels per day. Vladimir Putin and the Emir of Abu Dhabi, Mohammed bin Zayed Al Nahyan, on Tuesday, held a telephone conversation during which, according to Reuters, they discussed the continuation of coordination in the energy market.