New Delhi: The International Energy Agency has agreed to release 400 million barrels of oil from emergency reserves to the market amid the ongoing crisis in the Middle East. The decision was unanimously approved by all 32 member countries of the agency.
The IEA said in a statement, “Release of strategic oil reserves would take place over a timeframe that is appropriate to the national circumstances of each member country.” Officials said the planned release would be more than double the agency’s largest previous release. In 2022, IEA member countries released 182 million barrels after Russia launched its full-scale invasion of Ukraine.
The announcement came hours after the agency recommended a coordinated release of oil from global strategic reserves as tensions linked to the war involving Iran raised concerns about possible supply disruptions.
“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,” said Fatih Birol.
Move to stabilise world’s oil supply?
The decision comes as the escalating conflict involving Iran has intensified concerns about the security of oil flows from the Middle East, a region that accounts for a significant share of global crude exports.
Energy markets have remained tense amid fears that the conflict could disrupt shipping routes or production in major oil-producing countries.
Particular attention has focused on the Strait of Hormuz, one of the world’s most critical oil transit chokepoints, through which around 20 per cent of global petroleum supply passes each day. Any disruption to tanker movement through this narrow waterway could trigger sharp volatility in global energy markets.
A coordinated release of emergency stockpiles by IEA member countries is intended to add supply to the market and help ease price volatility if geopolitical tensions begin to affect physical oil flows.
IEA’s role in oil supply
The International Energy Agency, headquartered in Paris, coordinates emergency oil stock releases among its member nations during periods of supply disruption. Under its rules, member countries must maintain strategic reserves equal to at least 90 days of their net oil imports to protect against sudden shocks in global supply.
Over the years, the agency has organised coordinated releases in response to major geopolitical crises affecting energy markets.
In 2011, the IEA authorised the release of around 60 million barrels of oil to address supply disruptions caused by the Libyan Civil War.
More recently, in 2022, member countries of the IEA agreed to release more than 240 million barrels of oil following Russia’s invasion of Ukraine in an effort to stabilise global energy markets.
