The global energy watchdog will consider releasing more emergency crude stocks onto the global market to cool rising oil prices after warning it will take time for markets to recover from the ongoing crisis in the Strait of Hormuz.
Fatih Birol, head of the International Energy Agency, said its members were still holding large emergency oil reserves even after agreeing to the largest release of government crude in the market’s history, meaning more emergency oil reserves could still be released “when necessary.”
It came as the price of Brent crude rose almost 3% within minutes of the market opening on Monday, to around $106.50 a barrel. It later fell about 2%, but was still trading at just over $100 a barrel.
About 100 million barrels of emergency oil reserves will be made available to buyers in Asia this week in the first release of a planned deluge of 400 million barrels of crude onto the global market to make up for lost exports from Gulf nations, which has caused global oil prices to rise 40% this month.
“Despite this huge release, we still have a lot of stock left,” Birol said. “This current stock release, once completed, will reduce emergency stocks in IEA countries by only approximately 20%.”
Birol warned that while emergency reserves would provide a buffer for now, it was vital to reopen the Strait of Hormuz to allow Gulf oil and gas to reach the global market.
Donald Trump on Monday repeated his call for world leaders to help unblock the Strait of Hormuz, which before the crisis carried a fifth of the world’s seaborne crude oil from the world’s biggest producers to international buyers.
“Some are very excited about this and some are not,” Trump told reporters. “Some are countries we’ve helped for many, many years. We’ve protected them from horrible outside sources, and they weren’t that enthusiastic. And the level of enthusiasm is important to me.”
The United States responded to Iran’s effective blockade of the vital oil trade route with the weekend attack on Kharg Island, which hosts the infrastructure that exports about 90% of the Middle Eastern country’s crude oil.
Although the US military did not damage the oil hub, the attack raised further concerns about Gulf crude production, which is falling as producers are forced to shut down their oil fields.
Birol said global governments should be prepared if the conflict continues for a while longer, warning that global energy trade would take some time to recover even once the conflict ends.
