IEA announces record 400 million barrel oil reserve release amid Iran conflict, surging prices

CALGARY — Member countries of the International Energy Agency (IEA) agreed on Wednesday to release 400 million barrels of oil from emergency reserves to help bring down crude prices that have soared since the start of the US-Israeli conflict with Iran.The move, which is the largest coordinated drawdown in the agency’s history, was made after an extraordinary meeting of IEA member governments was convened by IEA Executive Director Fatih Birol to assess worsening supply disruptions linked to the Middle East conflict..“The oil market challenges we are facing are unprecedented in scale, therefore I am very glad that IEA member countries have responded with an emergency collective action of unprecedented size,” Birol said in an official statement.“Oil markets are global so the response to major disruptions needs to be global too.”Reuters had previously reported that the announcement had been widely expected earlier in the day, but the scale of the release still represents a major intervention.If implemented fully, the drawdown would be more than double the previous record, when IEA members released 182.7 million barrels in 2022 following Russia’s invasion of Ukraine.The recommendation was issued ahead of a meeting of G7 leaders chaired by French President Emmanuel Macron, where the plan is expected to be discussed further.IEA members collectively hold more than 1.2 billion barrels in government-controlled emergency reserves, as well as approximately 600 million barrels in industry stocks held under government obligation.The announcement follows earlier comments from Alberta’s Finance Minister Nate Horner, who said on Tuesday that he supported the IEA providing governments with detailed analysis before any coordinated release of reserves..Speaking to reporters Tuesday, Horner said G7 finance ministers had discussed the possibility of tapping strategic reserves but were waiting for further information from the IEA.“I think they had a lot of support, but needed more information to ensure they were making the right decision,” Horner said.“I think they've said that there's support for a comprehensive strategic release of the largest strategic reserves in the world, but they wanted the IEA to do the math for them and show them not only how much they would release, but also the timing.”Analysts now say the speed of the release is what will matter the most.This marks only the sixth coordinated stock release in the IEA’s history, underscoring the severity of the current disruption.If 100 million barrels are released over the next month, it would equal roughly 3.3 million barrels per day (bpd), which is currently far below the estimated 20 million bpd of supply disruptions linked to the conflict and the disruption of tanker traffic through the Strait of Hormuz, where roughly a quarter of the world’s seaborne oil trade passes through.Markets reacted cautiously to the announcement. Brent crude rose to around $91 per barrel, up from about $88.80 earlier, while West Texas Intermediate (WTI) was trading at $86.95 at the time of writing.The IEA said the pace of the release will depend on national circumstances, and further details will be announced at a later time.

IEA announces record 400 million barrel oil reserve release amid Iran conflict, surging prices

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