• The IEA will release 60 million barrels of oil to deal with supply constraints, its executive director has said.
  • This will be on top of the US' release of 180 million oil barrels from its strategic reserves, Fatih Birol said Wednesday.
  • Russia's war on Ukraine and sanctions have led to concerns about a supply crunch, as the country is a key producer.

International Energy Agency member countries will release 60 million barrels of oil from emergency reserves, the group's director has said, as concerns about a Russia-related supply squeeze unsettle the market.

The storage drawdown from US-allied states is on top of the 180 million barrels the US said it would release from its strategic reserves last week.

"The IEA is moving ahead with a collective oil stock release of 120 million barrels (including 60 million barrels contributed by the US as part of its overall draw from its Strategic Petroleum Reserve)," Fatih Birol, the IEA's executive director, said in a tweet Wednesday.

"More details of specific contributions will be made public soon," he said.

The tweet comes after the IEA agreed Friday on a coordinated release from their emergency stockpiles of 1.5 billion barrels in response to market turmoil. It will be the the second time in a month the 31-strong group of countries – not including Russia — has deployed the supplies in an effort to stabilize the market, and the fifth time ever.

Russia's invasion of Ukraine continues to put significant strains on global oil markets, resulting in heightened price volatility, the IEA said after its meeting last week. It said commercial inventories are at their lowest level since 2014, and oil producers have a limited ability to provide additional supply in the short term.

The war and sanctions on Russia have led to estimates a potential 2 billion barrels a day will be lost from the global market. Russia is the world's third-largest oil producer and second-largest crude oil exporter at about 5 million barrels a day, about 12% of global trade.

"While its welcome that we're seeing the IEA add another 60m barrels to last weeks 180m barrel release by the US, the picture for oil prices will continue to be driven by geopolitical events," CMC strategist Michael Hewson said.

Oil prices soared to 14-year highs in March, after Russia's invasion caused uncertainty around supply. Prices initially dropped after the IEA news, but were stepping higher early Thursday, with WTI crude gaining 0.82% to $96.83 a barrel, and Brent crude rising 0.92% to $102 per barrel.

The US plans to release 1 million barrels of crude oil every day from its Strategic Petroleum Reserve for the next six months. President Joe Biden called the move "a wartime bridge" to increase oil supply until production increases later this year to meet the demand for the commodity. 

The US released 30 million barrels of crude on March 1 to counter price pressures linked to the Russia-Ukraine conflict. Soaring energy prices have contributed to worries surrounding record 40-year high inflation in the US.

Read more: BlackRock warns a global energy crisis and runaway inflation may force the Fed to 'slam the brakes' on the US economy — and the firm reveals which stocks can thrive amid the turmoil

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