IEA to release 400 million barrels of emergency oil to calm prices

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Wealthy countries backed by the International Energy Agency agreed Wednesday to release emergency oil reserves on a record scale, aiming to reduce the effect of the Iran war on energy markets and on shipping lanes that depend on the Strait of Hormuz. The IEA said its members will make 400 million barrels available from emergency reserves, a move it described as intended to calm prices amid disrupted transit and shipping disruptions linked to the conflict.

The IEA’s plan comes as attacks attributed to Iran have targeted commercial ships across the Persian Gulf and effectively stopped cargo traffic through the Strait of Hormuz, a narrow waterway through which about a fifth of all oil is shipped from the Persian Gulf toward the Indian Ocean. The IEA said export volumes of crude and refined products are currently at less than 10% of prewar levels, and Birol said natural gas markets are also under severe pressure, with Asia the most affected region.

“This is a major action aiming to alleviate the immediate impacts of the disruption in markets,” said Fatih Birol, executive director of the IEA. “But, to be clear, the most important thing for a return to stable flows of oil and gas is the resumption of transit through the Strait of Hormuz.”

In its comparison to prior crisis releases, the IEA said the 400 million barrels were more than double the 182.7 million barrels that its 32 member countries released in 2022 after Russia launched a full-scale invasion of Ukraine. The IEA reserves were established in 1974 following the Arab oil embargo, and the agency said member countries currently hold more than 1.2 billion barrels of public emergency oil stocks, with a further 600 million barrels of industry stocks held under government obligation.

Birol’s remarks underscored the limits of reserve releases as long as the shipping bottleneck remains closed. He said the IEA’s announcement addressed “immediate impacts,” but energy officials and industry analysts said results will depend on how quickly disrupted flows can restart, noting that oil and gas changes can take time to reach consumers through refineries, pipelines, tankers and terminals.

The IEA’s announcement followed a day after energy ministers from the Group of Seven met in Paris to discuss ways to bring down prices, and it preceded a Wednesday videoconference meeting of G7 leaders that included U.S. President Donald Trump. French President Emmanuel Macron, speaking during the video call, said the IEA’s decision was “very important” and described the 400 million barrels as equivalent to “20 days of the volume being exported through the Strait of Hormuz.”

Trump said later that his administration would tap the U.S. Strategic Petroleum Reserve to reduce gasoline prices, and U.S. Energy Secretary Chris Wright confirmed the amount the U.S. would release. Wright said the United States would release 172 million barrels from the Strategic Petroleum Reserve as part of the IEA’s effort, that the release would begin next week, and that deliveries would take roughly 120 days; he said the administration would then work to replace about 200 million barrels in the next year.

Analysts said the reserve releases are unlikely to resolve the disruption on their own. Maksim Sonin, an energy executive who works with Stanford University’s Hydrogen Initiative, said the release could have “a short-term stabilizing effect,” but that it would fade if the war persists and the Strait of Hormuz remains closed. Neil Crosby, a vice president of oil analytics at Sparta, said the size of the release still amounted to “a little Band-Aid,” warning that the closure scenario had unfolded further than industry assumptions had anticipated.

Other countries pledged additional steps. Germany, Austria and Japan said earlier Wednesday they would release parts of their reserves in response to the IEA’s request for members to release 400 million barrels. Germany’s economy ministry said the IEA asked Germany to release 2.64 million tons of oil reserves, roughly 19.7 million barrels, and Katherina Reiche said it would take a couple of days before deliveries of the first quantities begin.

Reiche said Germany planned to introduce measures allowing gas stations to raise fuel prices no more than once a day, and she described the decision as rooted in “mutual solidarity.” In Austria, economy minister Wolfgang Hattmannsdorfer said the country would release part of its emergency oil reserve while extending the national strategic gas reserve, and he said that starting Monday price increases at gas stations would be allowed only three times a week, adding: “One thing is clear: in a crisis, there must be no crisis winners at the expense of commuters and businesses.”

The IEA’s action is the latest in a series of emergency reserve releases it has carried out during major disruptions. The agency said its members have released emergency stocks on five previous occasions, including during the 1990-1991 Gulf War, after Hurricane Katrina in 2005, during the Libyan civil war in 2011, and twice after Russia’s invasion of Ukraine.