IEA releases crude from strategic reserves . . . huh?

Today the International Energy Agency announced that its members would release 60 million barrels of crude oil (2 million per day for the next 30 days). According to the IEA’s press release the release of supplies was, “in response to the ongoing disruption of oil supplies from Libya,” and that, “this supply disruption has been underway for some time and its effect has become more pronounced as it has continued.” Also from the IEA, Libyan oil production in 2010 averaged 1.8 million barrels of oil per day, so there is some method to the 2 million per day figure. And the IEA will reconvene within 30 days to consider future actions.

I’m sure there are about 100 things about this situation that I don’t understand, but I’m not sure why this decision was made now, after crude oil prices have fallen by almost 19%, as can be seen in the chart below. Seems to me the high prices, themselves, have acted to reduce the amount demanded, driving the price down.

Here’s the Wordle cloud of the press release.

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