Australia has supported a decision to release 60 million barrels of emergency oil stocks by the International Energy Agency (IEA) in a bid to stabilise global energy markets.
On Wednesday, the government announced 31 members of the agency voted to release 60 million barrels of emergency reserve oil.
An extraordinary meeting of the IEA governing board was called earlier in the week to discuss the ongoing crisis in Ukraine as Russian president Vladimir Putin continues with his military invasion of the country.
Ukraine’s emergency services have reported that at least 2,000 civilians have been killed in the week-long attack so far, and the first major city to be seized by the Russian army occurred hours ago with the fall of Kherson in the south.
Angus Taylor, Australia’s minister for industry, energy and emissions reduction, issued a statement saying the global oil market had shown signs of uncertainty in response to Putin’s war.
“We are continuing to work constructively with our partners to build confidence in the market and help stabilise prices,” Taylor said.
“Australia will contribute to the collective action and release stocks held on our behalf in the US Strategic Petroleum Reserve.”
The global oil market is showing signs of uncertainty in response to the Russian invasion of Ukraine. Australia will contribute to the collective action and release oil stocks, helping to put downward pressure on prices both globally and here at home. #auspol pic.twitter.com/hmysoAFNr4
— Angus Taylor MP (@AngusTaylorMP) March 2, 2022
The IEA vote, supported by ministers from member countries of the agency, including Australia, aims to ‘send a unified and strong message to global oil markets that there will be no shortfall in supplies as a result of Russia’s invasion of Ukraine’.
This is only the fourth time such action has been taken by the agency since it was established in 1974 to put downward pressure on global and domestic oil prices. This release will be equivalent to a global supply of two million barrels a day for 30 days.
Australia has stored about 1.7 million barrels of oil in the US Strategic Petroleum Reserve – a US government complex with deep underground storage caverns built into salt domes. Just how much of Australia’s oil in the reserve will be released as part of the IEA collective action is yet to be announced.
“We know Australian families and businesses have been feeling this pressure at the pump so we hope this global action will ease prices,” Taylor added.
Fuel prices in Australia are mostly determined by the international price of oil, and a globally coordinated release of stocks to the market will increase supply and hopefully lower petrol prices.
On Thursday the IEA is also due to publish a 10-point plan to reduce European reliance on Russian gas supplies by next year.
Taylor said Russia’s hostilities hit global gas markets also but Australia was in a strong position in terms of fuel and gas supply, as well as energy security, to meet domestic demand.
“Australia can be relied upon to continue to meet our contractual obligations and contribute important liquidity to the global gas markets while continuing to ensure Australian gas is working for Australians,” he said.
The minister added that the government has committed $260 million for the building of domestic storage that will support a 40% increase in local diesel.