IEA Releases 400 Million Barrels of Oil to Resolve Iran War

The International Energy Agency on Wednesday agreed to release 400 million barrels of oil to address supply disruptions caused by the Iran war, the largest such move in the organization’s history.

The IEA has not set a timeline for when the shares will hit the market. It said the reserves would be released in a timeframe appropriate to the circumstances of each of its 32 member states.

“The oil market challenges we face are of an unprecedented scale, so I am very pleased that IEA member countries have responded with urgent collective action of an unprecedented scale,” IEA Executive Director Fatih Birol said in a statement.

“Oil markets are global so the response to major disruptions must be global,” Birol said. “Energy security is the IEA’s founding mandate, and I am pleased that IEA members are showing strong solidarity in taking decisive action together.”

Energy analysts warned ahead of the release that the IEA’s maximum drawdown capacity would not be able to cover the roughly 20 million barrels a day normally transported through the Strait of Hormuz.

The waterway is a narrow maritime corridor along the coast of Iran that connects the Persian Gulf and the Gulf of Oman. Approximately 20% of global oil and gas typically passes through it.

Oil prices have been the most volatile since the Iran war began on February 28, with global benchmark Brent crude rising to around $120 at the start of the week, before falling below $90.

Earlier in the day, Japanese Prime Minister Sanae Takaichi said it intended to release oil reserves from its national reserves early next week, citing an “extraordinarily high level of dependence” on the Middle East.

“In collaboration with the International Energy Agency (IEA), without waiting for an official decision on the release of international inventories, Japan has decided to release its inventories as early as the 16th of this month in order to ease supply and demand in the international energy market,” Takaichi told reporters.

IEA members currently hold more than 1.2 billion barrels of public emergency oil stocks, with another 600 million barrels of industry stocks held under government obligation.

The global energy watchdog had earlier released an estimated 182 million barrels of oil to support energy markets after Russia’s full-scale invasion of Ukraine in 2022.

This is a developing story. Check back for updates.