Prices Fall 2% as UK, Others Plan Coordinated Oil Release

By Adedapo Adesanya

The prices of crude oil further continued a downward trajectory on Friday as members of the International Energy Agency (IEA) agreed to join the United States to coordinate the largest oil reserves release.

Brent crude dropped $1.84 or 1.9 per cent to trade at $104.72 per barrel while the US West Texas Intermediate (WTI) lost $1.9 or 2.0 per cent to settle at $99.27 per barrel.

On Thursday, American President, Mr Joe Biden, announced the biggest ever release of oil from the US Strategic Petroleum Reserve (SPR) amounting to 180 million barrels over six months.

On Friday, to assist in the arrest of surging costs, IEA states which include the United Kingdom agreed to their second coordinated oil release in a month to calm markets roiled by Russia’s invasion of Ukraine.

IEA member countries did not agree on volumes or the commitments of each country.

The silence on the size of the agreed release underscored supply concerns as releases from finite supplies will likely struggle to make up for a loss of 3 million barrels per day of Russian oil estimated by the IEA.

The announcement showed IEA member states’ “strong and unified commitment to stabilizing global energy markets,” the Paris-based group of 31 industrialised nations but not Russia said in a statement following an emergency meeting.

“Details of the new emergency stock release will be made public early next week,” the IEA said in a statement.

The Paris-based agency last coordinated the largest coordinated oil release in its history on March 1 of nearly 62 million barrels, about half of which was contributed by the United States.

Analysts expect that Europe which faces a ripple effect of tight Russian gas supply will provide around a quarter of the new release.

The SPR release could help the market rebalance in the short term, but it would not solve the longer-term deficit plagued by supply constraints.

This is as the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ on Thursday stuck with plans for an increase of 432,000 barrels per day to their May output target despite Western pressure to add more.

Also pressuring prices, China’s commercial hub of Shanghai ground to a halt on Friday after the government locked down most of the city’s 26 million residents, aiming to stop the spread of COVID-19.