The United States and other nations that depend on oil imports said Thursday they will release and sell 60 million barrels of crude from emergency stocks in an effort to ease the strain high oil prices are putting on the global economy.
The release by the International Energy Agency, a group of more than two dozen countries, covers only what the world uses roughly every 16 hours. But it was enough to send oil prices lower, at least for the moment.
In addition to helping the struggling economies of the U.S. and Europe, analysts said the move was meant as a rebuke to OPEC, which has refused to increase oil production to bring down prices.
It will be the largest sale of crude ever from world strategic reserves and only the third since the IEA was formed in 1974 after the Arab oil embargo. The IEA released oil in 2005 after Hurricane Katrina and in 1990 and 1991 after Iraq invaded Kuwait.
Half the oil will come from reserves in the U.S. Refiners who turn crude into gasoline will be able to bid on the extra oil and have it shipped to them from the salt caverns along the Gulf Coast where it is stored.
The IEA said high oil demand and shortfalls of oil production caused by unrest in the Middle East and North Africa threatened to “undermine the fragile global economic recovery.”
The uprising in Libya has taken 1.5 million barrels of oil per day off of the market — half a million barrels less than will be released each day by the IEA. The price of oil rose to nearly $114 per barrel in at the end of April, a level not seen since the summer of 2008.
Since then, however, oil prices had fallen considerably, and analysts questioned how much relief the move would provide the economy, and for how long.
One analyst, Andrew Lipow, said the timing of the announcement, a day after Federal Reserve Chairman Ben Bernanke delivered a negative outlook on the economy, suggests that industrialized countries are grasping for solutions. He said Americans should expect the price of gasoline to fall, but not dramatically, in the coming weeks.
“Fifteen or 20 cents a gallon of relief is not enough to make people feel good about their job prospects or losses on the stock market or our general economic slowdown,” he said.
IEA and the White House said they were acting to increase the supply of oil available during the peak summer driving season.
“We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery,” Energy Secretary Steven Chu said.
Gas prices at the pump have already fallen for 20 days in a row. They were down another penny Wednesday, to a nationwide average of $3.61 per gallon, according to the AAA Daily Fuel Gauge Report. That’s about 21 cents lower than a month ago.
The timing of the release brought criticism from business groups and Republican lawmakers, who accused President Barack Obama of playing politics with the country’s oil reserves, which are intended to address emergencies.
The amount of oil to be released, 2 million barrels per day, represents just 2.2 percent of daily global oil demand.
The IEA’s move comes two weeks after OPEC, the Organization of Petroleum Exporting Countries, decided during a tense meeting not to increase oil production to meet rising demand. OPEC is made up primarily of Middle Eastern and North African nations.
OPEC countries are divided over whether to increase supply. Iran and Venezuela want to keep production stable in hopes of keeping prices — and revenue — high. Saudi Arabia wants to increase production, fearing that high oil prices will hurt the global economy and reduce oil demand over the long term.