- IEA members will release about 400m barrels of emergency oil reserves.
- The move follows major supply disruptions linked to the Strait of Hormuz.
- The UK, Japan and Germany are among countries contributing to the release.
The International Energy Agency (IEA) has ordered the largest release of emergency oil reserves in its history as global markets react to disruptions linked to the conflict involving the US, Israel and Iran.
Member countries of the Paris-based energy watchdog agreed to release around 400 million barrels of crude oil from government stockpiles. The move is intended to stabilise the global oil market after supply through the Strait of Hormuz was severely disrupted.
The scale of the release marks an unprecedented step. It is more than double the previous record set in 2022, when about 182 million barrels were released following Russia’s invasion of Ukraine.
Fatih Birol, executive director of the IEA, reportedly said coordinated action was necessary because oil markets operate globally.
“Oil markets are global so the response to major disruptions needs to be global too,” Birol reportedly said, adding that energy security remains the organisation’s founding purpose.
Hormuz disruption shakes global supply
The emergency release follows a sharp drop in oil shipments moving through the Strait of Hormuz, a narrow but vital shipping route near Iran.
The IEA said global markets had lost roughly 15 million barrels of crude oil a day due to a halt in trade through the waterway. The strait normally handles a large share of the world’s oil and seaborne gas shipments.
Under the emergency plan, the released oil will be gradually made available to global markets, with individual countries deciding the pace based on their own circumstances.
The UK has committed to releasing 13.5 million barrels from its emergency oil stocks. Government data suggests the country held the equivalent of about 120 days of oil reserves at the end of the previous year, although all of this is stored by industry under arrangements with the government.
These reserves are spread across refineries, storage terminals, power stations and offshore oil fields in the North Sea. Around 15 per cent of the UK’s stockpile is held in other European countries including the Netherlands, Belgium and Germany.
Countries step in as markets remain volatile
Other major economies have also pledged contributions.
Japan’s prime minister Sanae Takaichi reportedly said the country would release around 80 million barrels from both government and private reserves starting March 18. Japan relies heavily on oil passing through the Strait of Hormuz, which accounts for roughly 70 per cent of its imports.
Germany has also agreed to take part. Economy minister Katherina Reiche reportedly said Berlin would release the equivalent of 19.51 million barrels of crude oil as part of the coordinated effort.
“We will comply with this request and contribute our share, because Germany stands behind the IEA’s most important principle: mutual solidarity,” Reiche reportedly said.
The intervention is expected to replace roughly 26 days of oil supply that would normally move through the Strait of Hormuz.
Tensions in the region have also raised security risks for shipping. At least 13 commercial vessels have reportedly been attacked since the conflict began, including three incidents reported on March 11.
Oil prices have reacted sharply to the disruption. Brent crude briefly climbed to about £89 per barrel ($119.50) earlier in the week before easing to around £67 per barrel ($90) after reports emerged that major economies were preparing a coordinated market intervention.
The IEA, formed after the oil crisis of the 1970s, requires member countries to maintain at least 90 days of emergency oil reserves. Collectively, member states hold more than 1.2 billion barrels in public stockpiles, alongside a further 600 million barrels held by industry under government obligations.
While no G7 country has reported a physical shortage of oil so far, analysts suggest the disruption to Middle East shipping routes could continue to unsettle global energy markets in the weeks ahead.
