The International Energy Agency (IEA) will release 400 million barrels of oil to address major supply disruptions caused by the Iran war, with the United States agreeing to release 172 million barrels.
These barrels from IEA members’ emergency reserves will reach the market “over a timeframe that is appropriate to the national circumstances of each Member country,” the IEA said. This is the largest release in the organisation’s history.
“The 32 Member countries of the International Energy Agency unanimously agreed today to make 400 million barrels of oil from their emergency reserves available to the market to address disruptions in oil markets stemming from the war in the Middle East,” wrote the IEA.
“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 IEA executive director Fatih Birol. “Oil markets are global so the response to major disruptions needs to be global too.”
According to U.S. Secretary of Energy Chris Wright, the U.S. will begin releasing barrels next week, and it will take around 120 days to complete deliveries.
The U.S. has 415 million barrels in its strategic reserve. Wright has said it will add 200 million barrels within the next year to compensate for this release.
Despite the release of these barrels, oil prices continued to climb today. Brent crude prices were up 7% to US$98.38 per barrel as of 12:15 pm AEDT.
The Strait of Hormuz, where around 20% of global oil flows would usually transit, remains largely closed amid the U.S. and Israel’s war against Iran. At least three merchant ships were struck by projectiles near the strait yesterday.
Iran’s military has said that it will continue to block the strait as the war continues, and that the U.S. should “get ready for oil to be $200 a barrel”.
