IEA considers largest-ever strategic oil reserve release to counter Middle East war-driven surge in crude prices

The International Energy Agency (IEA) is considering the largest-ever release of strategic oil reserves to stabilize international crude prices that have surged in the wake of the war in the Middle East.

On the 10th (local time), The Wall Street Journal reported that the IEA proposed a plan to release strategic reserves in response to the spike in crude prices after convening an emergency meeting with member countries. The release is expected to exceed the 182 million barrels supplied to the market during Russia’s invasion of Ukraine in 2022.

The IEA shared the proposal at an emergency meeting attended by energy officials from its 32 member countries. Members are set to make a final decision on the 11th (local time), and adoption could be delayed if even one member objects.

The move is aimed at responding to a sharp contraction in oil supply from the Middle East after the United States and Israel attacked Iran. In particular, oil shipments have been heavily reduced as the Strait of Hormuz—effectively the link between the Persian Gulf and global markets—has been virtually closed.

The Strait of Hormuz is a critical maritime chokepoint through which about 20% of global oil supply passes. With rising concerns that Iran could attack tankers transiting the strait, oil transport has almost come to a halt.

Since Feb. 28, when the war escalated in earnest, international crude prices have risen by as much as 40%, at one point topping $100 per barrel. Prices have since slipped below $84 per barrel, reflecting remarks by U.S. President Donald Trump about the duration of the war, but refined products such as diesel remain elevated.

IEA member countries currently hold about 1.2 billion barrels of public stockpiles and about 600 million barrels of mandated commercial inventories. IEA Executive Director Fatih Birol said these volumes correspond to about 124 days’ worth of supply, based on disruptions in the Persian Gulf.

Assessments of past strategic reserve releases are mixed. The 2022 release following Russia’s invasion of Ukraine initially pushed crude prices up by about 20%, though analysts say it later contributed in part to stabilizing prices.

By contrast, when the United States carried out a strategic reserve release during the 1991 Gulf War, international crude prices plunged more than 20% in a single day as expectations of increased supply were priced in as the war began.