Consequence of the Ukraine war
Oil price rises above $110
03/02/2022 06:43 am
The price of oil continues to climb. In order to provide relief, the USA and other allies want to part with part of their reserves. The goal: There should be no shortage of supply as a result of the Russian invasion of Ukraine.
Oil prices have risen to more than $110 (€99) due to growing fears of the Ukraine war’s impact on global energy supplies. The price for a barrel (159 liters) of North Sea Brent rose by more than five percent to $110.87 on Wednesday night. The price of the WTI variety also rose five percent to $109.22.
Meanwhile, US President Joe Biden announced the release of 30 million barrels of oil from the strategic reserves in his State of the Union address. This is half of the 60 million barrels previously announced by International Energy Agency (IEA) member countries to curb price increases. “The United States has worked with 30 other countries to release 60 million barrels of oil from reserves around the world,” Biden told Congress in Washington. “America will lead this effort and release 30 million barrels of oil.” He stressed that Washington “stands ready to do more if necessary”.
Earlier, the IEA stressed that the decision to release the strategic reserves was a way to “send a unified and strong message to global oil markets that there will be no supply shortages as a result of Russia’s invasion of Ukraine.” According to the latest weekly report from the US Energy Information Administration, the US had 582 million barrels in its strategic oil reserves.
The IEA, based in Paris, was founded after the oil crisis in 1974 to ensure security of supply for industrialized countries. It has 31 members, including the US, Japan and numerous European countries such as Germany, France and the UK. You must maintain sufficient reserves for 90 days.
Russia is the second largest oil exporting country in the world. However, more and more western oil companies are withdrawing from Russian projects because of western sanctions against Moscow. Most recently, the US group ExxonMobil and the Italian group Eni announced their withdrawal.