EU Governments To Discuss U.S. Push for Oil Reserves Release

(Bloomberg) -- The European Union is set to debate on Monday its response to U.S. proposals for a coordinated release of emergency oil reserves to help counter a surge in energy prices after Russia's invasion of Ukraine.

EU energy ministers will present their views on oil market developments at an extraordinary meeting in Brussels, according to three people with knowledge of the matter. Member states are divided on whether the bloc should take part in a potential release, with EU law making any release conditional on strict criteria, said the people, who asked not to be identified.

With the OPEC+ group of oil producers so far sticking to plans to increase production only gradually, U.S. officials are pushing other countries to join in a coordinated release of reserves, according to a person familiar with the matter. The International Energy Agency, which would normally oversee any such move, said after a meeting on Friday that it had discussed potential courses of action to support energy security.

Read: U.S. Eyes Oil Reserves Release as Prices Rise on Ukraine

The U.S. administration is seeking to maximize the effectiveness even of the announcement itself -- though a move is not expected imminently. President Joe Biden already last week said he was committed to tapping the U.S. Strategic Petroleum Reserve if warranted -- a strategic signal meant to help tamp down concern about supplies. Oil prices surged above $100 a barrel last week.

U.K. Moves

Within the EU, some countries are more in favor of tapping reserves than others. For its part, the U.K, which has left the bloc, is also considering releasing reserves and will speak to Energy Commissioner Kadri Simson on Monday.

IEA members are obliged to maintain emergency stocks of crude oil and petroleum products equal to at least 90 days of net imports -- and that's written into EU law.

In the U.S., robust conversations are under way on tapping emergency oil supplies, including on potential price point triggers and how to coordinate a release with other nations. Modeling is being done to ascertain the size and scope of any potential release, two people with knowledge of the matter said last week.

At the EU ministerial meeting, the European Commission will present member states with different scenarios of hypothetical supply disruptions, as well as potential additional measures and preparations for next winter, according to a document by France, which will be chairing the gathering. The EU executive will also analyze the security of gas and oil supplies, France said in the note sent to national governments and seen by Bloomberg News.

Ministers will exchange views on issues including assistance for Ukraine in the energy sector, gas reserves management and the impact of energy prices on households and the industry.

Read: Europe Wants to Accelerate Power Grid Connection with Ukraine

A day before the emergency gathering, Greece called on the EU to ensure a contingency plan to mitigate the impact of the protracted crisis on households, businesses and consumers in the short and medium term.

In a letter to the French presidency and the European Commission, Energy Minister Konstantinos Skrekas proposed creating a fund that would alleviate the budgetary burden for member states while maintaining momentum for implementation of ambitious climate and energy reforms.

(Updates with agenda of EU meeting from the eighth paragraph.)

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