00:01 julie
Breaking news, the International Energy Agency has indeed approved the largest emergency oil reserve release ever. IEA members will release 400 million barrels of oil. Well, governments are trying to mitigate the spike in oil prices that we’re seeing. It was reported earlier this morning that the number could reach 300 to 400 million. Now we have confirmation. Yahoo Finance’s Jack Conley has been closely tracking all the developments as they unfold. Okay, so this is the biggest release ever in multiple different countries.
00:44 Jack Conley
The amount of oil released after Russia invaded Ukraine more than doubled in 2022 to about 180 million barrels. So this is a massive launch. That said, our inventory will still be well below all the inventory that has been taken off the market.
01:01 julie
Okay, so let’s do some math. Since the oil can’t get out of a straight line or who moves, how much is reduced.
01:10 Jack Conley
So it depends on your production of about 18 million barrels, 20 million barrels per day.
01:15 julie
every day.
01:16 Jack Conley
every day. so
01:17 julie
Now we are talking about the release of this 400 million.
01:21 Jack Conley
If you do the math, that’s about 2 million barrels per day. If you assume some kind of normal distribution schedule.
01:29 julie
Over time, this will happen. They don’t like putting everything out on the market.
01:31 Jack Conley
No, that’s not the 400 million barrels of oil hitting the market tomorrow morning. This is typically a six-month rollout, with members releasing their reserves slowly and at a steady pace, in part so as not to flood the market.
01:50 julie
Correct. OK So when we look at how oil prices react to this, you know, typically, your brain says, okay, supply is increasing, which means prices are going to go down a little bit. But this is not the case. I mean, part of it is probably expected.
02:13 Jack Conley
Um.
02:14 julie
Um,
02:14 Jack Conley
Some of them are already priced.
02:15 julie
Some of them have been priced. But at the same time, we’ve got these headlines this morning. We still get headlines about ships being attacked
02:23 Jack Conley
There are three more this morning.
02:23 julie
On the Strait of Hormuz. So, I mean, maybe it looks like, but regardless, the daily swings are so wild that they don’t necessarily make sense based on the actual headlines.
02:41 Jack Conley
Yes, I think that’s right. Traders are also looking at the issue from both sides. Of course, there will be more oil to come. You don’t get the traffic fix either. That’s what you really need to observe here. Can oil flow globally? There will be another 400 million barrels of oil on the market, which is great. This will help. This will bring prices down somewhat, but the main variable remains the blockade of the Persian Gulf. If you can’t get the oil onto a tanker and safely out via a straightaway, you’re still at a disadvantage. Even now you see Saudi Arabia trying to pipe some of its oil to the east and west, to the Red Sea. That’s still not enough to bridge the world’s largest oil bottleneck.
03:32 julie
Yes. Okay, Jack, thank you very much. I know you’ll be very busy.
03:36 Jack Conley
Thanks, Julie.
03:37 julie
Just like you. Appreciate it.