Daijiworld Media Network - Paris
Paris, Mar 11: The International Energy Agency has agreed to make 400 million barrels of oil from emergency reserves available to the market as tensions in the Middle East raise concerns over possible supply disruptions.
All 32 member countries of the agency unanimously backed the proposal. In a statement, the IEA said the release of strategic reserves would take place over a timeframe suited to the national circumstances of each member country.
The planned release would be more than double the agency’s largest previous coordinated action, when member nations placed 182 million barrels on the market in 2022 following Russia’s full-scale invasion of Ukraine.
The decision came hours after the IEA recommended a coordinated release of oil from global strategic reserves amid escalating tensions linked to the ongoing conflict involving Iran, which has heightened fears of disruptions to global energy supplies.
Such measures are typically considered when global oil supplies face major shocks or when crude prices surge due to geopolitical developments.
Energy markets have remained on edge as the conflict raises concerns over the security of oil flows from the Middle East, a region that accounts for a significant portion of the world’s crude exports.
Particular focus has been on the Strait of Hormuz, through which roughly 20 per cent of global petroleum supply passes each day. Any disruption to tanker movements through the narrow waterway could trigger sharp volatility in global energy markets.
A coordinated release by IEA members is intended to inject additional supply into the market and help stabilise prices if geopolitical tensions begin to affect physical oil flows.
Headquartered in Paris, the IEA coordinates emergency stock releases among its members during supply crises. Member countries are required to maintain emergency oil reserves equivalent to at least 90 days of net oil imports to protect against sudden supply disruptions.
The agency has organised similar releases during major geopolitical shocks. In 2011, it authorised the release of about 60 million barrels during supply disruptions linked to the Libyan civil war. More recently, in 2022, member countries agreed to release over 240 million barrels following Russia’s invasion of Ukraine to stabilise global markets.
Emergency stock releases are designed to prevent supply shortages, reduce extreme price volatility and ensure adequate energy availability during periods of geopolitical turmoil.
Oil prices have remained volatile in recent weeks as traders assess the potential impact of the Iran conflict on global supply chains, shipping routes and production in the Middle East.
Developments in global oil markets are closely monitored in India, the world’s third-largest oil importer, which depends heavily on crude imports to meet domestic demand.
Higher crude prices could widen India’s import bill and put pressure on inflation as well as the rupee. India also maintains its own strategic petroleum reserves at Visakhapatnam Strategic Petroleum Reserve, Mangaluru Strategic Petroleum Reserve and Padur Strategic Petroleum Reserve to cushion against global supply disruptions.
Further details on the scale and timing of the coordinated release are expected to emerge as discussions among IEA member countries continue.