The head of the International Energy Agency said the group’s members were ready to release more oil from emergency stockpiles to ease soaring energy prices, as he criticised Saudi Arabia and the United Arab Emirates for refusing to pump more crude.
Fatih Birol said the co-ordinated release last week by the US and other big energy consuming nations of 60mn barrels was an “initial response” and that the IEA was ready to do “everything” to reduce the volatility in energy markets driven by Russia’s invasion of Ukraine.
Oil prices have soared in recent days, with international benchmark Brent crude hitting a 14-year high of $139 a barrel on Monday on reports that the US was pushing for a ban on oil exports from Russia — the world’s second largest crude producer.
But rather than lowering the price, the planned release of IEA members’ oil last week saw Brent crude gain almost 10 per cent before pulling back, in a sign that traders had been expecting a bigger release.
“We are ready to [release] as much oil as is needed,” Birol told the Financial Times, noting that 60mn barrels was only 4 per cent of IEA members’ total strategic oil reserves. “We are monitoring the markets and we are ready to release more oil from the stocks.”
Birol added that he had also been in discussion with oil producing countries in the Middle East, Latin America and Asia about boosting output. “We are in close touch with . . . several producing countries who behave more responsibly than others,” he said, in a thinly-veiled criticism of Saudi Arabia and the UAE.
The two Opec members each have more spare production capacity than any other oil producer but have so far declined to increase output. Instead, the Opec+ group, which includes Russia, last week agreed to stick with a plan to only gradually replace production cut at the start of the pandemic.
“Saudi Arabia, Emirates and some other Middle East producers have [a] significant amount of production capacity and I would have expected from the last Opec+ meeting that those countries would share some comforting messages for the global oil markets in terms of increasing their production prospects,” Birol said. “That meeting, from a markets point of view, was a disappointing one.”
The IEA will publish new research today showing that global emissions reached a historic high last year. Carbon dioxide emissions from energy reached 36.3 gigatons in 2021, up 6 per cent from the previous year, according to the analysis.
“This shows that we have seen an unsustainable economic recovery last year,” he said. “The main driver here was the big chunk of the [emissions] growth coming from coal.”
The rapid global recovery after the Covid-19 pandemic largely caught energy planners unawares, leading to a jump in coal consumption across much of the world, including Europe, the US and China.
However, emissions this year could fall if there was a major economic downturn, Birol said, adding that the impact of the war was still uncertain. “If energy prices remain at these levels, it will be a major risk for the global economic recovery.”
Reducing dependence on Russia energy could also help to achieve climate goals, Birol added. “There are many areas [where] we can take steps which can help to reduce the Russian oil and gas, but at the same time bring us closer to our climate course.”
Europe is racing to cut its dependence on Russian oil and gas through measures such as extending the life of nuclear plants and boosting the pace of renewables.
The IEA will present its recommendations next week for how the world can rapidly reduce oil demand between now and the summer “driving season”, when demand typically rises.
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