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Gas prices are surging all over the world. And now a group of countries, including the U.S., are taking a historic step to bring them down by releasing their emergency oil reserves. But as NPR's Brittany Cronin reports, it may only provide temporary relief at the pump.
BRITTANY CRONIN, BYLINE: The U.S. and its allies just announced the release of 120 million barrels from their emergency oil reserves. It's the biggest-ever release from the 31 countries in the International Energy Agency. Oil prices dropped after the news, but the reaction from oil analysts like Tai Liu at BloombergNEF was more muted.
TAI LIU: The thing about this release is that they don't really address the medium term and the long-term challenges for the oil market.
CRONIN: Despite the size of this massive oil dump, the world faces a stark reality. Russia is looking at an expected supply loss of 3 million barrels a day due to sanctions following its invasion of Ukraine. And that'll have huge implications for global energy markets.
JIM BURKHARD: What we're seeing today with Russia is the potential for what could be the largest oil supply disruption ever.
CRONIN: That's Jim Burkhard, a vice president at S&P Global Commodity Insights. The U.S., UK, Canada and Australia have already banned the import of Russian oil, and many buyers are shunning Russian oil due to financial sanctions.
BURKHARD: That's not a recipe for lower prices. It points to conditions for high or higher prices.
CRONIN: The U.S. is making the biggest push to lower gas prices. Last week, the Biden administration announced that it will release 180 million barrels of oil over the next several months. But the solution to high oil prices is increasing supply, and that's where the world is running into trouble.
BURKHARD: Here's the cold, hard reality. It's very, very difficult to replace a large-scale loss of Russian oil supply.
CRONIN: The U.S. is the world's largest oil producer, but it would take several months before additional oil became available, even if oil companies ramped up production today. And the oil cartel OPEC+ is also limited in what it can do.
BURKHARD: Some members simply have no more capacity to produce because of the 2020 oil price collapse or other difficulties related to war and sanctions.
CRONIN: So the world faces a real problem. This release of emergency oil will not provide a long-term solution for high gas prices. Britney Cronin, NPR News. Transcript provided by NPR, Copyright NPR.
