The IEA will release oil stockpiles in an effort to stem surging prices, new report says

• The IEA will release oil stockpiles to stem the price surge following Russia's invasion of Ukraine, Bloomberg reported on Tuesday.
• The energy watchdog, which is comprised of 30 countries, will release 60 million barrels.
• But Brent and WTI crude oil zoomed past $100 per barrel on Tuesday as the intensifying Ukraine war stoked supply fears.

In an attempt to halt rising oil prices, the International Energy Agency has agreed to a coordinated and strategic release of its oil stockpiles, people familiar with the matter told Bloomberg.

The IEA, which is comprised of 30 member countries including the US, Japan, and Germany, will release 60 million barrels around the world, according to the report.

Half of the release will come from the US Strategic Petroleum Reserve, with the rest coming from Europe and Asia. The oil release will represent the Biden administration's second utilization of strategic oil reserves, as rising prices become top of mind for consumers ahead of mid-term elections later this year.

The IEA's decision to tap oil reserves represents its first release since the Libyan civil war in 2011. Prior to that, the IEA released oil reserves during the 1991 Gulf War and the 2005 hurricane season that included Hurricane Rita and Katrina.

Despite the additional supply on the way, Brent and WTI crude oil surged about 8% on Tuesday to more than $100 per barrel, representing the commodity's highest price since 2014 and adding to inflationary pressures.

The US has been trying to tame inflation since its economy recovered from the COVID-19 pandemic, and the Federal Reserve is geared to raise interest rates for the first time since 2018 later this month in response to the higher prices.

Oil prices have been on the rise due to a combination of stronger demand as travel rebounds post-pandemic and continued restraint from oil producers, who have avoided pumping too much unlike in previous years. For example, US oil rig counts remain 68% below their peak seen in 2014, according to data from Baker Hughes.

On top of that, OPEC members have resisted calls from President Biden to increase supply in recent months. And US oil companies have largely held off from boosting production sharply while they enjoy higher profits and prioritize payouts to shareholders.

Oil stocks have benefited from the surge in oil prices, as the US energy sector is up 28% year-to-date, easily becoming the best performing sector. The energy sector has more than doubled the S&P 500's performance since the 2020 pandemic low reached on March 23.