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3 hours ago
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The International Energy Agency is poised to call for the largest release of government oil reserves in its history to help calm the oil price shock triggered by the US-Israeli attacks on Iran.
The world’s energy watchdog is expected to call on its 32 members to release about 400m barrels of emergency crude, a third of the group’s total government stockpiles and more than double the IEA’s previous biggest release.
The emergency intervention, first reported by the Wall Street Journal, would easily outstrip the 182m barrels of oil put on the market by IEA countries across two releases in 2022 after Russia’s full-scale invasion of Ukraine.
Under the terms of the plan, the body’s 32 member states would reportedly have up to 90 days to release oil stocks into the global market, which has lost almost 20m barrels of crude a day because of a block on trade via the strait of Hormuz.
The Paris-based agency is expected to publish its recommendation at 1300 GMT on Wednesday, before a 1400 GMT meeting of G7 leaders chaired by the French president, Emmanuel Macron.
The group of seven leading economies said on Wednesday morning that it supported, in principle, the use of strategic oil reserves to address supply problems and market volatility.
The proposal is said to have first circulated at an emergency meeting on Tuesday of energy officials from IEA member states to decide whether to make their emergency stocks available to the market after some of the steepest oil price increases in the market’s history.
G7 energy ministers held a separate remote meeting later that day, along with the head of the IEA, to discuss whether to release the emergency oil stocks to try to stabilise the situation.
However, the release could still be delayed if even one IEA member objects at Wednesday’s meeting.
Members of the alliance, which was set up after the Middle East oil crisis in the 1970s, are required to hold at least 90 days’ worth of crude supplies in reserve, which can be released to the market in the event of a supply shock.
In total, IEA members hold more than 1.2bn barrels of public emergency oil stocks and a further 600m barrels of stocks held by industry under government obligation.
The UK held 120 days’ worth of oil stocks at the end of last year, although 100% of this was held by companies in the industry under an agreement with the government. The stocks are held in refineries, oil terminals, power stations, and at offshore fields in the North Sea. About 15% of the stockpile is held in overseas countries, including the Netherlands, Belgium and Germany.
Although no G7 countries have faced physical shortages of oil since the war began last month, the price of Brent crude has fluctuated wildly, briefly jumping as high as $119.50 a barrel on Monday, which took it to levels not seen since 2022.
Shipments of oil and seaborne gas from the Middle East have struggled to reach the global market for almost two week as result of the effective closure of the strait of Hormuz, a key shipping lane off the coast of Iran through which about a fifth of global oil and seaborne gas tankers pass.
Oil is now sitting at about $90 a barrel after reports that the G7 would meet to discuss a market intervention.
In a statement the G7 members said: “Working alongside the IEA, we are vigilantly monitoring energy market trends and are coordinating within the G7 and with our international partners, IEA member countries, and beyond.”
The G7 ministers added that they supported in principle the “implementation of proactive measures to address the situation, including the use of strategic reserves”.
