- IEA has announced the release of 400 million barrels of oil from emergency reserves to stabilise global energy markets.
- The move follows supply disruptions caused by escalating conflict in the Middle East.
The International Energy Agency (IEA) announced that its member countries will release 400 million barrels of oil from strategic reserves to ease the impact of the Middle East conflict on global energy markets. The coordinated release marks the largest emergency oil stock release in the agency’s history.
The Executive Director of the IEA, Fatih Birol, said member countries unanimously agreed to take the action. He explained that the decision aims to reduce the immediate pressure on oil markets caused by supply disruptions.
Birol added that restoring normal energy flows will depend largely on reopening the Strait of Hormuz. The strait carries about 20 per cent of the world’s oil and gas supplies, making it one of the most important energy routes globally.
The latest intervention surpasses the 182 million barrels released by IEA member countries in 2022 after Vladimir Putin ordered the invasion of Ukraine.
According to the 32-member organisation, countries will release the oil stocks over timelines that fit their national circumstances. Some governments will also introduce additional emergency measures to stabilise energy supply.
Global oil markets have experienced strong volatility since the United States and Israel launched strikes against Iran late last month. Iran responded with attacks across the Gulf region and actions that disrupted shipping through the Strait of Hormuz.
The announcement came as leaders of the Group of Seven discussed the economic impact of the conflict during a video conference meeting. The meeting was chaired by the President of France, Emmanuel Macron. Macron urged leaders, including Donald Trump, to coordinate efforts to reopen the Strait of Hormuz as soon as possible.
However, Macron stressed that the crisis should not lead to easing sanctions imposed on Russia following the Ukraine invasion. He said G7 countries will coordinate with Gulf nations in the coming days to stabilise energy flows and reduce global economic risks. France and its allies are also preparing a defensive mission aimed at reopening the critical shipping route.
Several countries have already announced plans to release oil from their reserves. Japan’s Prime Minister, Sanae Takaichi, said Japan will begin releasing oil reserves as early as Monday. Meanwhile, Germany’s Economy and Energy Minister, Katherina Reiche, confirmed that Germany will also release oil stocks.
According to Reiche, Germany plans to release 2.4 million tonnes of crude oil, although she did not specify a timeline. The United States has also downplayed the long-term impact of the disruption. The US Interior Secretary, Doug Burgum, said the current problem relates to transportation rather than global energy supply. He explained that the world currently has enough energy resources but faces temporary disruptions in oil transit.
Senior analyst at Swissquote Bank, Ipek Ozkardeskaya, said the 400 million barrels will represent a small share of global oil consumption. IEA countries collectively consume about 45 million barrels of oil per day. She therefore described the emergency release as a temporary solution.
Ozkardeskaya also noted that oil production in the Middle East has already declined by about six per cent due to the ongoing conflict involving Iran. Governments around the world have begun taking measures to manage rising fuel prices and supply risks.
Bangladesh has deployed soldiers to guard oil depots, while India has tightened controls on natural gas and cooking gas distribution. French authorities have inspected petrol stations and penalised operators accused of inflating fuel prices.
Greece announced plans to cap profit margins on petrol and certain food products for three months.
According to the IEA, its member countries hold more than 1.2 billion barrels of public emergency oil stocks, with an additional 600 million barrels held by industry under government mandates.