IEA Countries Release Record Emergency Oil Reserves Amid War

Dozens of countries have agreed to release a record volume of oil from their emergency reserves in an attempt to stabilise global energy markets.

Members of the International Energy Agency (IEA) including the United States, the United Kingdom and other major economies will release 400 million barrels of oil from strategic stockpiles.

The organisation described the move as a response to supply challenges that are “unprecedented in scale”.

The decision follows major disruptions to global energy supplies caused by the ongoing conflict between the United States, Israel and Iran.

Strait of Hormuz Disruption Drives Oil Price Surge

The conflict has severely disrupted shipping through the Strait of Hormuz, one of the world’s most important energy corridors.

About 25% of global oil shipments transported by sea normally pass through this narrow waterway.

Since the war began, tanker traffic through the strait has almost stopped. Oil production in parts of the region has also fallen.

These disruptions have pushed global oil prices sharply higher.

Crude oil now trades nearly 25% above the level recorded before the conflict began, reflecting fears of prolonged supply shortages.

Largest Emergency Oil Release in History

The planned release of 400 million barrels is the largest coordinated oil stock release ever organized by the IEA.

It more than doubles the previous record set in 2022, when member countries released emergency reserves after Russia’s invasion of Ukraine disrupted global energy markets.

Despite its scale, analysts say the release will only provide temporary relief.

The volume represents roughly three to four days of global oil consumption.

It also equals about two weeks of the oil that normally flows through the Strait of Hormuz.

How Strategic Oil Reserves Work

IEA member countries maintain large emergency stockpiles of oil to protect against sudden supply disruptions.

Each member nation must hold reserves equal to at least 90 days of its oil consumption.

Together, these governments hold more than 1.2 billion barrels of oil in strategic reserves.

In addition, private companies store around 600 million barrels of oil under government obligations.

These reserves act as a safety buffer when conflicts, disasters or political tensions threaten global supply.

However, governments cannot release them repeatedly.

“Once you release them, they don’t exist,” said Nick Butler, a former head of strategy at oil giant BP.

Oil Will Not Flood the Market Immediately

Releasing emergency reserves does not mean oil suddenly floods into global markets.

The oil itself sits in storage facilities, refineries and terminals across many countries.

Energy companies such as Shell and BP hold part of these stocks in tanks and strategic storage sites.

When governments approve a release, producers simply make more oil available for refineries and traders to purchase.

However, analysts say another bottleneck exists in the global energy system.

There is currently a shortage of refining capacity, which limits how quickly crude oil can be converted into petrol, diesel and other fuels.

Analysts Warn Impact May Be Limited

Some energy experts say the reserve release will help calm markets but cannot fully offset supply disruptions caused by the conflict.

Jorge Leon, an analyst at Rystad Energy, said traders had already expected the move.

“Everyone knew there would be a release of emergency reserves,” he said.

“But prices haven’t come down as much as you would expect.”

That suggests the market still fears deeper supply disruptions if the conflict continues.

Gas Markets Face a Different Crisis

The oil release will also do little to ease pressure on natural gas markets.

The International Energy Agency’s executive director, Fatih Birol, warned that the global gas situation remains extremely difficult.

The conflict has caused a 20% drop in liquefied natural gas (LNG) supplies.

Prices for benchmark UK LNG contracts have surged about 70% since the war began.

Although prices remain below the peaks seen during the Russia-Ukraine energy crisis, analysts say the market remains highly fragile.

Governments Coordinate Response

Governments have coordinated closely to prevent the energy shock from spreading across global economies.

UK Energy Secretary Ed Miliband said the country was working with international partners to stabilise oil markets.

“The UK is playing our part in working with our international allies to address the disruption in oil markets,” he said.

Markets Still Face Uncertainty

Despite the unprecedented release of emergency reserves, energy markets remain volatile.

Much will depend on how long the conflict continues and whether shipping through the Strait of Hormuz resumes.

If disruptions persist, analysts warn that global fuel prices could remain elevated.

For now, governments hope the coordinated release of strategic reserves will buy time and prevent the crisis from triggering a larger shock to the global economy.