US ‘sidelined’ energy partners
LONDON: The United States announced a record-sized release of emergency crude oil reserves in March without consulting partners in the International Energy Agency (IEA), leaving them scrambling to match with releases of their own, according to two sources familiar with the matter.
Unilateral action by Washington to address global supply or price issues risks undermining the US relationship with the IEA, the world’s energy watchdog that normally oversees international releases from emergency stockpiles, and could raise questions about the continued relevance of the group.
The Paris-based IEA, which groups together 31 mostly industrialised countries, was established after the 1973 oil price shock to ensure continuous energy supplies to its members in the event of an embargo, war, or devastating storm.
The group’s members have become worried that US President Joe Biden is using the Strategic Petroleum Reserve (SPR) to tamp down rampant domestic inflation for political reasons, instead of protecting consumer countries from a global supply disruption, according to the sources who declined to be identified because of the sensitivity of the topic.
“The IEA was embarrassed by the [US] release which was at the start done essentially unilaterally by the US,” said a source familiar with the diplomacy around the release.
“It is the common understanding of IEA members that we must cooperate as a whole,” said another source, this one from an IEA member country, who said the US announcement came as a surprise.
The IEA told Reuters it had been in close contact with all member countries including the United States in the run-up to its two stock release announcements this year: “This consultation as well as the decisions for taking collective action were conducted in line with IEA procedures.”
The US Department of Energy said the United States had been in “frequent contact” with the IEA and its member states on energy security leading up the announcement, but confirmed its decision to release the oil was “independent” of the IEA.
It did not comment on whether the United States shared in advance the timing and volume of its release.
“The United States and other IEA members countries can and have, independently, released oil from their strategic reserves separate from any IEA collective action,” 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 US announcement on March 31 that it would unleash 180 million barrels from the SPR at a pace of 1 million barrels per day to bring down soaring global energy prices and address cuts in Russian oil supplies since its invasion of Ukraine in February.
The sources told Reuters that Washington had not informed the IEA or its members that the announcement was coming — a break with past precedent — and that the record-sized volume, over three times bigger than any previous release from the SPR, was a surprise.