The International Energy Agency will convene an extraordinary meeting of its member countries on Tuesday to discuss a possible release of oil reserves to address supply disruption caused by the Iran war.
The more than 30 members “will assess current security of supply and market conditions to inform a subsequent decision on whether to make emergency stocks available to the market (…),” IEA Executive Director Fatih Birol said in a statement.
IEA members are advanced economies primarily from North America, Europe and Northeast Asia. Together they have around 1.2 billion barrels of oil in reserve. Another 600 million barrels are held in industrial reserves under government obligation.
Oil prices fell more than 11% as the market anticipates a release of oil stocks. Prices had risen to a high of nearly $120 a barrel on Monday due to the supply disruption.
Energy ministers from the Group of Seven countries met early Tuesday to discuss options to address the supply disruption, Birol said. The members of the G7 are Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. They are also members of the IEA.
The United States believes a joint release of 300 to 400 million barrels would be appropriate, representing 25% to 30% of the 1.2 billion barrels held in reserve, sources told CNBC on Monday.
Tanker traffic through the critical Strait of Hormuz has been severely disrupted as vessels are concerned about threats from Iran. This has caused the largest oil supply disruption in history, according to an analysis by consulting firm Rapidan Energy. About 20% of world oil consumption passed through the Strait before the war broke out.
Arab Gulf oil producers have cut production because they have difficulty exporting their crude across the Strait because of the war. Saudi Aramco CEO Amin Nasser warned Tuesday that the Iran war will have “catastrophic consequences” for the global oil market the longer the war continues.
— CNBC’s Eamon Javers contributed to this report.
