EXCLUSIVE Biden Sidelines Global Energy Partners With Record Emergency Oil Release

LONDON, May 9 (Reuters) – The United States announced record levels of emergency crude oil reserves in March without consulting partners in the International Energy Agency, prompting it to rush to match its own releases, according to two known sources. with the matter.

Washington’s unilateral action to address global supply or price problems threatens to undermine the US’s relationship with the IEA, the world’s energy watchdog that normally oversees international spills from emergency supplies, and could raise questions about the continued relevance of the group.

The Paris-based IEA, which unites 31 mainly industrialized countries, was created after the oil price shock of 1973 to guarantee a continuous energy supply to its members in the event of an embargo, war or devastating storm.

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Members of the group have become concerned that US President Joe Biden is using the Strategic Petroleum Reserve (SPR) to tackle rampant domestic inflation for political reasons, rather than protect consumer countries from a global supply disruption, according to the group. sources that did not want to be identified due to the sensitivity of the subject.

“The IEA was ashamed of the (US) release, which was initially essentially done unilaterally by the US,” said a source familiar with diplomacy surrounding the release.

“It’s the common view of IEA members that we should work together as a whole,” said another source, this one from an IEA member state, who said the US announcement came as a surprise.

The IEA told Reuters it has been in close contact with all member states, including the United States, ahead of its two share release announcements this year: “These consultations and decisions for collective action were conducted in accordance with IEA procedures. .”

The U.S. Department of Energy said the United States had “frequent contact” with the IEA and its member states about energy security ahead of the announcement, but confirmed the decision to release the oil was “independent” of the IEA.

It did not comment on whether the United States shared the timing and volume of the release in advance.

“The United States and other IEA member countries can and have independently discharged oil from their strategic reserves, regardless of any collective action by the IEA,” the ministry said in a statement to Reuters.

The White House did not immediately respond to a request from Reuters for comment.

It concerns the US announcement on March 31 that it would unleash 180 million barrels from the SPR at a rate of 1 million barrels per day to lower rising global energy prices and cut Russian oil supply cuts since Ukraine’s invasion in Russia. to tackle in February. read more

The sources told Reuters that Washington had not informed the IEA or its members that the announcement was imminent — a break from previous precedents — and that the record volume, more than three times greater than any previous release of the SPR, was a surprise.

The US announcement came a day before members of the IEA were due to meet to discuss a coordinated release. After the meeting, chaired by US Secretary of Energy Jennifer Granholm, the IEA announced that a coordinated release had been agreed but did not provide details on volumes.

At that time, the IEA leadership began bilateral meetings with other members to gather contributions, according to the two sources. After a week of diplomacy, it got pledges from its non-US members to unleash another 60 million barrels together. [nL2N2W41DP]

However, that figure of 60 million barrels was relatively small. Under IEA rules, a Member State’s contribution to a coordinated emergency shutdown should roughly correspond to the share of its oil consumption within the group.

With the United States accounting for about half of member consumption, the IEA contribution should be roughly equal to the US draw.

“That was impossible,” said a source familiar with diplomacy. “It was impossible because no one had such supplies.”

“The look of the release being done 75% in the US and 25% in the rest of the world is just strange,” the source added.

The IEA announcement covered up the mismatch, detailing a release of 120 million barrels, of which 60 million will come from the United States in the first two months.

The Biden government’s release marked the second time in six months that it had signed a major withdrawal from the SPR without the approval of the IEA.

In November, the United States pledged a release of 50 million barrels to curb rising prices following a sudden rebound in demand during the darkest days of the COVID-19 pandemic.

While some IEA members such as South Korea, Britain and Japan contributed to that release, the agency itself sat out as it saw no major supply disruption to address at the time.

However, after the Russian invasion, the IEA member states found it necessary to organize a coordinated release. On March 1, they announced a release of 60 million barrels – half from the United States – to counter potential supply disruptions to Russia, a leading global oil and gas producer.

Biden’s Republican opponents have criticized him for his move to release the 180 million barrels of US stockpiles, arguing that the decision was political and that he should instead encourage domestic oil production.

Record high prices for gasoline in the United States are seen as one of the biggest vulnerabilities for Biden’s Democratic party, leading to midterm elections in November.

Biden delivered on a pledge to phase out fossil fuels to help fight climate change, but his administration has not successfully curtailed the industry and has in recent months urged drillers to speed up production to lower prices.

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Reporting by Reuters agencies; Editing by Richard Valdmanis and Marguerita Choy

Our Standards: The Thomson Reuters Trust Principles.

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