Oil price tops $100 a barrel amid IEA plans for ‘largest’ reserve release

Crude oil is dispensed into a bottle in this illustration photo June 1, 2017. REUTERS-Thomas White-Illustration

Oil prices, on Friday, traded above $100 a barrel as member nations of the International Energy Agency (IEA) announced plans to release crude from their strategic stocks.

Brent crude futures, the global oil benchmark, fell 0.53 per cent to $101.48 a barrel. West Texas Intermediate (WTI) crude futures rose 0.84 per cent to $96.84 a barrel.

According to the IEA, member nations of the agency confirmed the releaseof 120 million barrels over six months, making it the largest stock release in its history.

It said the US would contribute about60 million barrels, which are part of the larger release from its Strategic Petroleum Reserve (SPR) that was announcedon March 31.

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Stephen Bnnock, PVM analyst, questioned the impact of the reserves being released.

“Despite these unprecedented volumes, doubts remain whether this incoming flood of supply will address the shortfall in Russian crude,” Reuters quoted Brennock as saying.

JPMorgan expects the release of the reserves to “go a long way in the short term” to make up for the 1 million barrels per day of the Russian oil supply it expects to remain permanently offline.

“However, looking forward to 2023 and beyond, global producers will likely need to ramp up investment to both fill the Russia-sized gap in supply and restock IEA strategic reserves,” the bank said in a note.

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While Russia has found Asian buyers, Western buyers are shunning the country’s oil over the Ukraine crisis.

In Nigeria, despite high oil prices, the decade-long petrol subsidy, also known as under-recovery, continues to erode gains.

On Thursday, President Muhammadu Buhari requested the approval of N4 trillion as payment for petrol subsidy in 2022. The president also asked the national assembly to review components of the 2022 budget, including the oil benchmark.

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