LONDON, May 9 (Reuters) – The United States in March announced a record release of emergency crude oil reserves without consulting International Energy Agency partners, leaving it to scramble to match its own releases, according to two sources familiar with the matter.
Unilateral action by Washington to address global supply or price issues risks undermining the United States’ relationship with the IEA, the global energy watchdog that normally oversees international discharges from stockpiles. emergency, and could raise questions about the continued relevance of the group.
The Paris-based IEA, which brings together 31 mostly industrialized countries, was created after the 1973 oil shock to ensure a continuous supply of energy to its members in the event of an embargo, war or devastating storm.
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Members of the group are concerned that US President Joe Biden is using the Strategic Petroleum Reserve (SPR) to curb runaway domestic inflation for political reasons, instead of protecting consuming countries from a supply disruption worldwide, according to the sources who declined to be identified. due to the sensitivity of the subject.
“The IEA was embarrassed by the (US) release which was initially essentially one-sided by the United States,” a source close to the diplomacy around the release said.
“It is the common understanding of IEA members that we need to cooperate as a whole,” said another source, this one from an IEA member country, who said the US announcement had been a surprise.
The IEA told Reuters it had been in close contact with all member countries, including the United States, ahead of its two stock release announcements this year: “This consultation as well as the decisions class action have been taken in accordance with IEA procedures.”
The US Department of Energy said the US had been in “frequent contact” with the IEA and its member states on energy security prior to the announcement, but confirmed its decision to release the oil was ” independent” from the IEA.
He did not say whether the United States had shared the timing and volume of its release in advance.
“The United States and other IEA member countries can and have independently released oil from their strategic reserves independent of any collective action by the IEA,” the department said in a statement to Reuters.
The White House did not immediately respond to a Reuters request for comment.
At issue is the U.S. announcement on March 31 that it would release 180 million barrels from the SPR at a rate of 1 million barrels per day to drive down global energy prices and address cutbacks. of Russian oil supplies since its invasion of Ukraine in February. Read more
The sources told Reuters that Washington did not notify the IEA or its members of the upcoming announcement – a break from previous – and that the record volume, more than three times larger than any previous release from the SPR , was a surprise.
The US announcement came a day before IEA members were due to meet to discuss a coordinated release. Following the meeting, chaired by US Energy Secretary Jennifer Granholm, the IEA said a coordinated release had been agreed, but gave no details on volumes.
At this point, IEA management has started bilateral meetings with other members to cobble together contributions, according to the two sources. After a week of diplomacy, it secured commitments from its non-US members to release a combined additional 60 million barrels. [nL2N2W41DP]
This figure of 60 million barrels was, however, relatively low. According to IEA rules, a member country’s contribution to a coordinated emergency release must roughly correspond to the proportion of its oil consumption within the group.
With the United States accounting for about half of members’ consumption, the IEA’s contribution should have roughly matched the US drawdown.
“It was not feasible,” said the source close to diplomacy. “It was impossible because no one had such stocks.”
“The optics that the release is 75% in the US and 25% in the rest of the world is just weird,” the source added.
The IEA’s announcement glossed over the mismatch, detailing a release of 120 million barrels, including 60 million from the United States in the first two months – effectively ignoring the fact that the United States was aiming to keep the oil flowing for another four months.
The Biden administration’s release marked the second time in six months that it had approved a major SPR pullout without the IEA’s blessing.
In November, the United States pledged to release 50 million barrels to rein in rising prices due to a sudden rebound in demand from the darkest days of the COVID-19 pandemic.
While some IEA members like South Korea, Britain and Japan contributed to this post, the agency itself held back as it saw no major supply disruptions. to be resolved at the time.
After the invasion of Russia, however, the member countries of the IEA saw fit to organize a coordinated release. On March 1, they announced a release of 60 million barrels – half of it from the United States – to counter likely supply disruptions from Russia, one of the world’s top oil and gas producers.
Republican opponents of Biden criticized him for his decision to release the 180 million barrels of U.S. stockpiles, arguing the decision was political and that he should encourage domestic oil production instead.
Record gasoline prices in the United States are seen as a major vulnerability for Biden’s Democratic Party leading up to the midterm elections in November.
Biden has promised to phase out fossil fuels to help fight climate change, but his administration has failed to impose any restrictions on the industry and has in recent months urged drillers to ramp up production to bring down price.
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Reports from Reuters offices; Editing by Richard Valdmanis and Marguerita Choy
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