The International Energy Agency will release more than 100 million barrels of oil reserves or it will be difficult to fill the market gap

The International Energy Agency (IEA) said on the 6th that its member countries plan to release 120 million barrels of crude oil reserves to deal with the supply gap and ease the surge in oil prices caused by the conflict between Russia and Ukraine

120 million barrels of oil reserves will be released

According to Reuters, on April 6, local time, the head of the International Energy Agency, Fatih Birol, said that the joint member states plan to release 120 million barrels of oil reserves, half of which will be 60 million barrels from the United States and the other half from other countries.

The IEA expects Russia's oil production to fall by a quarter this month, leaving global energy supplies short of a massive 3 million barrels a day

The U.

On March 1, the IEA announced the release of 60 million barrels of oil reserves, equivalent to 2 million barrels per day, for 30 days, including the release of 1 million barrels per day in the United States

After the announcement, international oil prices fell significantly

Long-term effects may be limited

Analysts have pointed out that in the long run, using limited oil supplies to make up for reduced oil market flows may not be successful in driving down prices

　　"The U.
S.
releases 1 million barrels per day of strategic oil reserves, while Russia's production may decrease by 2 million barrels per day, making it difficult to fill the gap," said Garibetti, vice president of senior analysis at consulting firm Farsighted Energy
.

　　Garibetti said the historic release of large crude oil reserves was the right decision in the current crisis, and consumers should feel the benefits soon, but it only solved half the problem
.

　　UBS said recently that although the use of strategic crude oil reserves may help alleviate supply shortages in the short term, it does not believe it is a long-term solution to the global energy crisis and will not solve the structural imbalance in the oil market
.
UBS continues to see higher oil prices in 2023
.

　　UBS also said it was unclear how much refinery demand would be for sour crude from the U.
S.
Strategic Crude Reserve because the U.
S.
has not yet undertaken such a large-scale release of crude oil reserves
.
Some market participants believe that logistics bottlenecks such as pipeline capacity may limit the scale of the release of strategic crude oil reserves, which means that the actual release of strategic crude oil reserves in the United States in the next six months may be lower than the planned 180 million barrels
.

　　UBS said the release of strategic crude oil reserves would not solve the structural supply shortages caused by years of underinvestment and a recovery in global oil demand, and inventories would also need to be refilled in the future
.
Media reports that the release of the U.
S.
strategic crude oil reserve indicates that the nuclear talks between the United States and Iran have not continued, which may delay the return of Iranian crude oil to the market
.
In addition, OPEC+ continued its previous plan to gradually increase supply on the 1st, showing that these oil-producing countries face the challenge of shrinking production capacity
.

　　Stephen Brennock, an analyst at PVM Petroleum Associates, said the U.
S.
plan to unleash crude oil reserves will hardly change the market's lack of oil in the coming months
.
"The US release of crude oil reserves pales in comparison to the 3 million barrels per day (bpd) that Russia will cut due to sanctions and buyer shunning
.
"

　　Crude oil market volatility will continue

　　In recent days, the situation in Russia and Ukraine has once again fallen into a stalemate.
Energy sanctions between the United States, Europe and Russia may appear frequently to contain each other, and fluctuations in the crude oil market may be inevitable
.

　　Sophie Lund-Yates, an analyst at Hargreaves Lansdown Asset Management in the United Kingdom, said that a new round of sanctions against Russia by Western countries will undoubtedly help oil prices rise, and market volatility is expected to continue as the geopolitical situation unfolds
.

　　At present, the US and EU sanctions against Russia in the energy sector show significant differences
.
The U.
S.
has decided to stop importing oil, liquefied natural gas and coal from Russia, while the European Union will cut Russian gas imports by two-thirds by the end of this year and wean itself off Russian fossil fuels by 2030
.

　　According to Agence France-Presse, on April 6, local time, EU policymakers failed to agree on new sanctions against Russia, including a ban on the import of Russian coal
.
According to the European Commission website, the EU depends on Russia for 45% of its coal imports
.
In March this year, European countries imported a total of 7.
1 million tons of thermal coal for power generation and heating, a year-on-year increase of 40.
5%, the highest import level since March 2019
.
(Comprehensive report by reporter Qin Tianhong)

　　Market analyst Irina Slav wrote that the release of a large number of crude oil reserves has brought oil prices back below $100 per barrel
.
Coal prices rose sharply after news of a ban on coal imports from Russia came out
.
Irina Slav said that if the European Union agrees to ban Russian coal imports later, oil prices may rise
.
If the EU targets oil itself, oil prices will rise even higher
.
She expects Brent to rise to $120 is still possible
.

　　In its latest research report, JPMorgan continued to maintain its forecast that crude oil prices would average $114 and $101 a barrel in the second quarter and the second half of this year
.
JPMorgan Chase said that the released oil reserves are not a continuous source of supply.
If Russia still has more than 1 million barrels of crude oil production stranded next year, there will be a deep supply gap in 2023, which will make the current oil price in 2023 $98 / The barrel forecast became too low
.

From: Economic Information Daily