Taylor urges international effort to stabilise oil market

Energy Minister Angus Taylor has told an extraordinary meeting of G20 energy leaders international co-operation is needed to stabilise the global oil market.

Mr Taylor asked leaders at Friday's virtual meeting to help "ease market volatility and restore market confidence".

A meeting of G20 energy leaders has been urged to address the volatile oil market.Credit:AP

"We believe there is a need to take action to stabilise oil markets at supply and price levels that support ongoing investment, supply diversity and energy security," he said.

Since the coronavirus outbreak, demand for petrol has fallen 50 per cent and jet fuel 70 per cent worldwide as airlines ground flights and people stay home, hammering the global oil price. Oversupply has been exacerbated by last month's split between Saudi and Russian producers, which both decided to ramp up production, although they have now agreed to cut output by more than a fifth.

The International Energy Agency (IEA) last week warned "the oil world has seen many shocks over the years, but none has hit the industry with quite the ferocity we are witnessing today".

Supply gluts and price falls are typically corrected by increased consumer consumption, but that is unlikely amid coronavirus lockdowns.

"Instead, a rapid build-up of oil stocks is starting to saturate available storage capacity, pushing down prices further," the IEA said.

Alluding to the supply war, Mr Taylor encouraged "all countries to behave in a sustainable way and act within their capacity to help reduce volatility in the market".

The IEA has said oil-consuming nations should help stabilise the market by buying more oil.

Mr Taylor backed this call, saying he had been "advancing a program to enhance our oil reserves prior to the COVID-19 pandemic".

In March, Mr Taylor signed a memorandum of understanding to tap into the US government's tightly guarded emergency fuel reserves to shore up Australian supply.

Australia imports 90 per cent of its liquid fuels and has only enough in storage to last 54 days, below the 90-day supply required by the IEA. Under the MoU, oil stored in America will count towards Australia's overall supply, helping it meet the IEA obligations.

Mr Taylor on Thursday said he was working Australia's oil refineries to protect the nation's fuel security amid the coronavirus crisis but reassured motorists there was no immediate threat to fuel supply.

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