The White House announced Tuesday, that 50 million barrels of oil from its Strategic Petroleum Reserve would be released by the United States. China and South Korea will also join the coordinated effort.
The International Energy Agency monitors oil supply worldwide for the top economies. It has reported that there have been three coordinated stock releases in the past 25 years. These were before and after the Gulf War of 1991. After Hurricanes Katrina, Rita, and the Gulf of Mexico oil facilities were damaged by Hurricanes Katrina in 2005. They also responded to disruptions caused by the war in Libya in 2011.
“We acknowledge that the rising oil prices is placing a strain on consumers and has contributed to inflationary pressures in a period where the economic recovery remains uneven, faces a range risks,” said the IEA in a statement. The US initiative was led by the US.
Key Details of the market intervention are still unclear. This includes the exact amounts that major countries will contribute. But here’s what we do know about the actions of other countries:
At a briefing Wednesday, Zhao Lijian, spokesperson for the Chinese Foreign Ministry said that China would arrange the release state crude oil reserves and other necessary measures to preserve the stability of oil markets.
He said that China has always placed great importance on the stability of international oil markets and that it is ready to communicate with all parties to ensure market stability.
CNN reported Friday that China, the world’s second-largest economy was also the largest importer of oil. China’s National Food and Strategic Reserves Administration spokeswoman confirmed that China had already released an undisclosed amount oil to help keep industry costs under control.
Fumio Kishida, the Japanese Prime Minister, confirmed Wednesday that Japan will release oil from state reserves.
“We have been cooperating to the United States in order to stabilize international oil markets,” he said to reporters, adding that the move would be made in a manner that does not violate oil stockpiling regulations.
Stabilizing crude oil prices is essential to help the economy recover from the coronavirus epidemic, according to Kishida. He stated that more information about the timing of the oil delivery and its amount will be made public at a later date.
According to the US Energy Information Administration, Japan had 388 millions barrels of total strategic crude oils stocks as of June 2020. According to the US Energy Information Administration, 76% were government stocks while 24% were commercial.
Oil prices have fallen due to the possibility that the United States and other large energy consumers will release emergency barrels. This has at least helped to reduce them in the short-term. US oil prices fell 10% after reaching $85 per barrel in October. This has in turn helped to reduce the rise in gasoline prices.
India has committed to releasing 5 million barrels. The release will be coordinated with the other five countries.
The Indian government released a statement shortly following the White House announcement.
According to it, several Indian states had already taken “difficult actions” in order to lower local fuel tax.
“Despite the heavy fiscal burden on government, [they]”They were taken to provide relief for citizens,” it said.
In a statement, the South Korean government stated that it would consult other countries on the timing and amount of its oil reserve release. However, it said that it expected the level to be “similar to previous cases of international cooperation.”
“The South Korean government accepted the US proposal to release its oil reserve. This was after considering the necessity of international cooperation due to the recent sharp rise of international oil prices and the importance of the [South Korea]It stated that the US alliance and the participation by major countries were part of it in a statement issued by its ministry of foreign relations.
In a statement, the UK government stated that it would allow oil companies to “voluntarily let go” of oil reserves up to 1.5million barrels. This was described as “a sensible and measured move to support global markets as we emerge out of the pandemic.”
A government spokesperson stated that the government will continue to work with international partners to help the global economy transition after the pandemic.
—CNN’s Beijing bureau, Manveena Suri, Emiko Jozuka, Junko Ogura and Yoonjung Seo contributed to this report.