The International Energy Agency (IEA) has agreed to release 400 million barrels of emergency oil reserves in its largest-ever intervention as governments try to stabilise energy markets shaken by the Middle East war.
The move comes after oil prices surged earlier this week, briefly approaching $120 per barrel, as shipping disruptions in the Strait of Hormuz threatened global supply.
The planned release far exceeds the 183 million barrels released in 2022 following Russia’s invasion of Ukraine.
“The oil-market challenges we are facing are unprecedented in scale,” IEA Executive Director Fatih Birol said in a statement announcing the decision.
Major Countries Contributing to the Release
The decision was approved unanimously by IEA member nations, with several countries already outlining their contributions.
- Japan: about 80 million barrels
- South Korea: about 22.5 million barrels
- Germany: about 19.5 million barrels
- France: about 14.5 million barrels
- United Kingdom: about 13.5 million barrels
Additional supply is expected from other member countries, including the United States, which holds the largest strategic reserve.
The US Strategic Petroleum Reserve currently contains about 415 million barrels, slightly more than half of its total capacity.
Strait of Hormuz Remains the Core Problem
Despite the massive reserve release, energy officials say the key issue remains the disruption of shipments through the Strait of Hormuz, one of the world’s most critical oil routes.
Around 20% of the global seaborne oil supply normally passes through the waterway, which connects Gulf oil producers with global markets.
With tanker traffic largely halted due to the conflict, large volumes of crude and fuel are being kept off the global market.
“The most important thing for energy market stability remains the resumption of transit through the Strait of Hormuz,” Birol said.
Source: International Energy Agency
Supply Disruptions Already Hitting Production
The closure of the shipping route is also creating storage problems for oil-producing countries in the Persian Gulf.
As storage tanks fill up, major producers such as Saudi Arabia, the United Arab Emirates, and Iraq have already begun cutting production, reducing global supply by about 6%.
At the same time, analysts estimate the conflict could be removing between 11 million and 16 million barrels per day from global oil flows.
Reserve Release May Only Provide Temporary Relief
Even with the record release, analysts say the oil market may still face shortages if the conflict continues.
Traders estimate that the oil could reach the market at a pace of roughly 2 to 4 million barrels per day, though some forecasts suggest the rate could be lower.
In comparison, the current supply disruption is significantly larger.
Some analysts warn that reserve releases may only buy time for markets, rather than fully replacing the lost Middle East supply.
Ultimately, experts say restoring tanker traffic through the Strait of Hormuz remains the most important factor for stabilizing global oil prices.
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