US and allies to release 60 million oil barrels to address price spike

The United States and its allies have agreed to release
60 million barrels from their oil reserves amid surging prices and tightening
supplies after Russia invades Ukraine.

According to a report by CNN, President Joe Biden seeks
to dampen the effect of Russia’s invasion of Ukraine on gas prices at home.

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The US Strategic Petroleum Reserve will contribute 30
million barrels and the other 30 will come from allies in Europe and Asia. The
other allies include Germany, Italy, the United Kingdom, the Netherlands and
other major European countries including Japan and South Korea.

Russia’s invasion of Ukraine has raised concerns about
oil supply disruptions, as Russia is the world’s second-largest oil producer.
Oil prices have reached their peak since 2014 following the invasion. Brent oil
prices settled above $100 per barrel on Monday. US crude and Brent rose 5% on
Tuesday even as the International Energy Agency meets to address “the
impact of Russia’s invasion of Ukraine on oil supply and how IEA members can
play a role in stabilizing energy markets.”

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High oil prices have raised the prices at the gas pump to
seven-year highs. The national average for regular gasoline climbed to $3.62 on
Tuesday, up around 9 cents in a week and 24 cents in a month.

For the last several weeks, US officials have been
meeting with key energy supplying countries to secure commitments to back-fill
any market disruptions.  Two senior
administration officials visited Saudi Arabia to discuss the need to address
the effect on oil markets. The US informed Saudi Arabia ahead of the oil
reserve announcement.

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Last week, President Joe Biden had said “We are
actively working with countries around the world to evaluate a collective
release from the Strategic Petroleum Reserves of major energy-consuming
countries. And the United States will release additional barrels of oil as
conditions warrant”.

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The International Energy Agency, a Paris-based
organization is holding a last-minute meeting on Tuesday on oil supply with the
goal of “stabilizing markets.” The meeting with be chaired by US
Secretary of Energy Jennifer Granholm.