EXCLUSIVE Biden kicked out global energy partners from record oil spill in emergencies

LONDON, May 9 (Reuters) – The United States announced a record release of emergency crude oil reserves in March without consulting its partners at the International Energy Agency, prompting it to fight for its own spill, according to two sources familiar with the matter.

Washington’s unilateral action to address global supply or prices risks undermining U.S. relations with the IEA, the world’s energy supervisor who oversees international discharges from emergency supplies, could raise questions about the group’s continued importance.

The Paris-based IEA, which brings together 31 mostly industrialized countries, was founded after the 1973 oil price shock to ensure a continuous supply of energy 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 Oil Reserve (SPR) to curb rising domestic inflation for political reasons, instead of protecting consumer countries from global supply disruptions, according to sources who declined to be identified.

“The IEA was ashamed (of the United States) of the announcement, which was initially made unilaterally by the United States,” said a source familiar with the diplomacy.

“It is common for IEA members to understand that we need to work together as a whole,” said another source, this one from an IEA member country, who said the U.S. announcement was a surprise.

The IEA told Reuters it had been in close contact with all member states, including the United States, ahead of its two stockpiles this year: “These consultations, as well as decisions to take collective action, have been conducted in accordance with IEA procedures.”

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

He did not comment on whether the United States had pre-shared the time and scope of the release.

“The United States and other IEA member states can and have, nonetheless, released oil from their strategic reserves separately from any IEA collective action,” the department told Reuters.

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

It is the US announcement from March 31 that it will release 180 million barrels of SPR at the rate of one million barrels per day to lower rising global energy prices and address the reduction in Russian oil supplies since its invasion of Ukraine in February. Read more

Sources told Reuters that Washington had not informed the IEA or its members that the announcement was coming – a break with a previous precedent – and that the record volume, more than three times that of any previous edition of the SPR, was a surprise.

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

At that point, the IEA leadership began bilateral meetings with other members to collect contributions, according to two sources. After a week of diplomacy, it has secured the commitment of its non-US members to jointly release another 60 million barrels. [nL2N2W41DP]

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

Given that the United States accounts for about half of spending among members, the IEA’s contribution should roughly match the U.S. draw.

“It was not feasible,” said a source familiar with the diplomacy. “It was impossible because no one had such supplies.”

“The optics of publishing that is done 75% in the US and 25% in the rest of the world is just weird,” the source added.

The IEA’s announcement silenced the discrepancy, with details of the 120 million barrel release, of which 60 million came from the United States in the first two months – in fact ignoring the fact that the U.S. intended to keep oil flow for an additional four months.

The release of the Biden administration marked the second time in six months that it had signed a major withdrawal from the SPR without the blessing of the IEA.

In November, the United States promised to release 50 million barrels to tame rising prices due to a sharp recovery in demand from the darkest days of the COVID-19 pandemic.

While some IEA members such as South Korea, Britain and Japan contributed to the release, the agency itself gave up because it did not see major supply disruptions at the time.

However, after the Russian invasion, IEA member countries considered it appropriate to organize a coordinated release. On March 1, they announced the release of 60 million barrels – half from the United States – to counter possible supply disruptions from Russia, the world’s leading oil and gas producer.

Biden’s Republican opponents have criticized him for his move to release 180 million barrels from U.S. stockpiles, arguing the decision was a political one and should instead boost domestic oil production.

Record high gasoline prices in the United States are considered the biggest vulnerability for Biden’s Democratic Party, which led in the mid-term election in November.

Biden promised to phase out fossil fuels to help fight climate change, but his administration has failed to impose any restrictions on the industry and has urged Bushars to speed up production in recent months to lower prices.

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Reuters office reporting; Edited by Richard Valdmanis and Marguerite Choy

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