PARIS / LONDON: The International Energy Agency (IEA) has recommended releasing 400 million barrels of strategic oil reserves, the largest coordinated stock release in its history, to help stabilise global markets following the sharp surge in crude prices triggered by the conflict involving Iran.
The Paris-based agency said the proposal had been unanimously approved by its 32 member countries, although the exact timing and pace of the release will be determined later. The move comes as world leaders discuss ways to address the energy market turmoil caused by the ongoing conflict between United States, Israel and Iran.
The issue was also expected to be discussed during a meeting of leaders of the Group of Seven (G7), chaired by Emmanuel Macron, President of France.
Earlier, Katherina Reiche, Economy Minister of Germany, confirmed reports about the planned 400-million-barrel release and said her country would participate in the initiative. She noted that the United States and Japan are expected to be the largest contributors to the stock drawdown.
According to diplomatic sources, the push for releasing emergency reserves was led primarily by the US government as global oil prices surged amid fears of supply disruptions.
Doug Burgum, US Interior Secretary, welcomed the reports of the planned release, saying it could help ease pressure on international oil markets.
“This is the perfect time to think about releasing some of those reserves to take some pressure off global prices,” Burgum said in an interview with Fox News.
However, he stressed that the world was not facing a physical shortage of oil but rather a temporary logistics issue. “We’ve got a transit problem, which is temporary and is being addressed militarily and diplomatically,” he added.
Energy analysts say the speed of the release will be a critical factor in determining its effectiveness. For example, releasing 100 million barrels over a month would equal roughly 3.3 million barrels per day, far below the estimated 20 million barrels per day of oil flows typically moving through the strategic Strait of Hormuz between Iran and Oman, which has been severely disrupted by the conflict.
Despite the announcement, oil prices rebounded on Wednesday as traders questioned whether the planned reserve release would be sufficient to offset potential supply shocks from the escalating Middle East crisis.
By Reuters
