The International Energy Agency agreed Wednesday to release the largest volume of emergency oil reserves in its history, in a bid to counter the effects of the war in the Middle East on energy markets.
The Paris-based organization said it will make 400 million barrels of oil available from its members’ emergency reserves. It is a larger reserve than the 182.7 million barrels released in 2022 by the 32 IEA member countries in response to the large-scale Russian invasion of Ukraine.
“Without sufficient routes to market and no more storage available, Middle East oil producers have begun to reduce production,” said IEA executive director Fatih Birol.
“And we have seen more attacks and damage to energy and energy-related infrastructure. Refinery operations have also been disrupted, with significant implications for the supply of jet fuel and diesel in particular.”
IEA member countries currently hold more than 1.2 billion barrels of public emergency oil reserves, and another 600 million barrels of industrial reserves are held under government obligation.
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In response to attacks from the United States and Israel, Iran has attacked commercial ships throughout the Persian Gulf, intensifying a campaign to squeeze the oil-rich region as global energy concerns rise.
Iran has effectively stopped cargo traffic in the Strait of Hormuz, through which about a fifth of all oil is sent from the Persian Gulf to the Indian Ocean. It has also targeted oil fields and refineries in Arab Gulf nations, aiming to generate enough global economic pain to pressure the United States and Israel to end their attacks.
Germany, Austria and Japan said on Wednesday they would release some of their oil reserves following a request by the IEA for members to release a record 400 million barrels to help moderate energy price increases due to the Iran war.
Energy ministers from the Group of Seven met on Tuesday at the IEA headquarters in Paris to look for ways to lower prices. Birol later said they discussed all available options, including making the IEA’s emergency oil stocks available to the market.
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The IEA reserves were established in 1974 following the Arab oil embargo.
“This is an important action aimed at alleviating the immediate impacts of the disruption on the markets,” Birol added. “But to be clear, the most important thing to return to stable oil and gas flows is the resumption of transit through the Strait of Hormuz.”
Birol said that 15 million barrels per day of crude oil and another five million barrels per day of petroleum products normally pass through the Strait of Hormuz.
“This is equivalent to about 25% of the world’s seaborne oil trade. And now flows of oil, gas and other raw materials through the strait have virtually stopped.”
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The G7 is made up of the major industrialized nations: Canada, the United States, France, Italy, Japan, Germany and Great Britain. Austria is not a member.
The group’s leaders, including US President Donald Trump, met via video conference on Wednesday to discuss energy issues.
During his introductory remarks, French President Emmanuel Macron praised the IEA’s decision to release emergency oil reserves, saying they were equivalent to “20 days of the volume exported through the Strait of Hormuz.”
The IEA measure was prepared at the G7 level, Macron said, noting that the amount pledged by the G7 nations alone comprises 70% of the total and that France would contribute 14.5 million barrels.
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“I think it is very important to also see everything we can do to increase our global production,” Macron added.
German Economy Minister Katherina Reiche said the IEA asked Germany to release 2.64 million tonnes of its oil reserves. It was not immediately clear how much Austria was liberating.
He said it would be a couple of days before the first quantities were delivered.
“Germany supports the IEA’s most important principle of mutual solidarity,” Reiche said.
The German government also said it will introduce a measure to allow gas stations in Germany to increase fuel prices no more than once a day. The federal government wants to implement this as quickly as possible, Reiche said.
According to the IEA, export volumes of crude and refined products are currently at less than 10% of pre-war levels.
In Austria, price increases will only be allowed at gas stations three times a week starting Monday, according to the country’s economy minister. Wolfgang Hattmannsdorfer said his country was releasing part of the emergency oil reserve and expanding the national strategic gas reserve, adding: “One thing is clear: in a crisis, there must be no winners at the expense of travelers and businesses.”
IEA countries have released emergency stockpiles on five previous occasions: during the 1990-1991 Gulf War, after Hurricane Katrina in 2005, during the Libyan civil war in 2011 and twice after the Russian invasion of Ukraine.
Birol pointed out that the situation in the natural gas markets is also very difficult, with Asia being the most affected region.
“There are few options to replace the missing LNG cargoes from Qatar and the Emirates,” he said. “The global energy supply has been reduced by approximately 20%.”
