IEA launches ‘largest ever’ oil stock release amid Middle East conflict
The International Energy Agency (IEA) has agreed to release 400 million bbls of crude oil from strategic reserves, as the conflict in Iran continues to destabilise oil flow through the Persian Gulf.
IMAGE: Crude oil pumpjacks. Getty Images
This is the sixth time a coordinated emergency stock release is occurring in the IEA’s history, the agency said, adding that all 32 member countries have backed the move.
The IEA’s decision comes as tanker movements through the Strait of Hormuz – a vital corridor handling about 25% of global seaborne oil trade – have
dropped sharply amid rising tensions in the Persian Gulf region.
The conflict, which began on 28 February, “has impeded oil flows through the Strait of Hormuz, with export volumes of crude and refined products currently at less than 10% of pre-conflict levels,” the IEA said.
Individual allocations from member countries have yet to be detailed. The US, however, will contribute 172 million bbls from its Strategic Petroleum Reserve (SPR) as part of the IEA-led effort, the US Department of Energy (DoE) said in a statement.
“This will take approximately 120 days to deliver, based on planned discharge rates,” the US DoE said.
G7 member Japan said it will release around 80 million bbls from its private and national oil reserves as its contribution, Reuters reported.
“Japan will act first to ease global energy market supply and demand, releasing reserves as early as the 16th of this month,” Reuters quoted Japanese Prime Minister Sanae Takaichi as saying.
The IEA member countries collectively hold over 1.2 billion bbls of emergency crude stocks and refined fuels – ready to be deployed during global supply disruptions like the ongoing conflict between the US, Israel and Iran.
The emergency stocks will be made available to the market “over a timeframe that is appropriate to the national circumstances of each Member country and will be supplemented by additional emergency measures by some countries,” the IEA said.
The release is expected to curb a surge in oil prices following disruptions to roughly one-fifth of global oil flows through the Strait of Hormuz, the IEA said. However, Brent crude’s price showed little immediate reaction following the agency’s announcement.
“Brent crude is flirting dangerously close to the $100/bbl level once again, with the IEA's coordinated oil release doing little to ease supply fears,” two analysts from ING Bank said.
By Aparupa Mazumder
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