IEA statement on situation in Saudi Arabia: Update

The International Energy Agency remains in regular contact with authorities in Saudi Arabia and other major producing and consuming countries, as well as industry, following Saturday’s attacks. We welcome the statement made by Saudi Energy Minister Prince Abdulaziz bin Salman on bringing Saudi Arabia’s suspended production back online.

The IEA reiterates its commitment to ensure that global oil markets remain well supplied. As ever, the IEA is ready to take rapid action in the event of any sustained shortfalls.

For now, markets remain well supplied with ample stocks available. IEA member countries hold about 1.55 billion barrels of emergency stocks in government-controlled agencies, which amount to 15 days of total world oil demand. These can be drawn upon in an emergency collective action and would be more than enough to offset any significant disruption in supplies for an extended period of time.

In addition, IEA member countries also hold 2.9 billion barrels of industry stocks as of the end of July, a two-year high that can cover more than a month of world oil demand. These stocks include about 650 million barrels of obligated emergency stocks, which can be made immediately available to the market when governments lower their holding requirements.

Taken together, these emergency reserves can bring ample additional supply to the global market if needed.

“Recent events are a reminder that oil security cannot be taken for granted, even at times when markets are well supplied, and that energy security remains an indispensable pillar of the global economy,” said Dr Fatih Birol, the IEA’s Executive Director. “This is why the IEA remains vigilant about the risk of disruptions to global oil supplies, whether they are caused by extreme weather events such as hurricanes, major technical outages, or geopolitical crises, and stands ready to act when needed.”

A key aspect of the IEA’s work since its foundation in 1974 has been to help coordinate a collective response to major disruptions in the supply of oil. The collective response system is designed to mitigate the negative economic effects of a sudden oil supply crisis by providing additional oil to the global market on a short-term basis. The IEA emergency response system is not a tool for price intervention or long-term supply management, both of which are more effectively addressed through other measures.

Since the creation of the IEA, there have been three coordinated stock releases: in the build up to the Gulf War in 1991; after Hurricanes Katrina and Rita damaged offshore oil rigs, pipelines and refineries in the Gulf of Mexico in 2005; and in response to the prolonged disruption of oil supply caused by the Libyan Civil War in 2011.

IEA Members Countries: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, New Zealand, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, The Netherlands, Turkey, United Kingdom, United States.

IEA Association Countries: Brazil, China, India, Indonesia, Morocco, Singapore, South Africa, Thailand.