IEA members to release 400 million barrels from oil reserves to ease Iran war’s impact
Sign up now: Get ST's newsletters delivered to your inbox
A petrol station in Munich, Germany. Earlier on March 11, Germany and Japan said they would tap into their oil reserves.
PHOTO: EPA
- Japan will release oil reserves by March 16 due to its high dependence on Middle Eastern oil, following the Middle East war.
- Germany plans to release oil reserves following the IEA’s request for member states to release 400 million barrels.
- G-7 energy ministers assured readiness to take “all necessary measures” and coordinate with IEA members to address the issue.
AI generated
BERLIN – The International Energy Agency (IEA) said on March 11 its member countries would unlock 400 million barrels of oil from their reserves to ease the impact of the Middle East war, the biggest such release ever.
“The oil market challenges we are facing are unprecedented in scale. Therefore, I am very glad that IEA member countries have responded with an emergency collective action of unprecedented size,” IEA executive director Fatih Birol said.
The IEA-coordinated release exceeded the 182 million barrels of oil that member countries of the Paris-based global energy body released in 2022, when Russian leader Vladimir Putin invaded Ukraine.
“The emergency stocks will be made available to the market over a timeframe that is appropriate to the national circumstances of each member country and will be supplemented by additional emergency measures by some countries,” the IEA said.
The announcement came as leaders of the Group of Seven advanced economies (G-7) discussed the widespread economic fallout from the US-Israeli war with Iran, now into its second week, at a video conference meeting chaired by French President Emmanuel Macron.
Earlier on March 11, Japan, whose strategic oil reserves are among the world’s largest, and Germany said they would tap into their oil reserves.
Prime Minister Sanae Takaichi said Japan would release oil reserves as early as March 16, while Germany’s Economy and Energy Minister Katherina Reiche said her country planned to do the same, without specifying a date.
“Without waiting for a formal decision on coordinated international stock releases with the IEA, Japan has decided to take the lead in easing supply and demand in the international energy market by releasing strategic reserves as early as the 16th of this month,” Ms Takaichi told reporters.
“Given Japan’s exceptionally high dependence on the Middle East (for oil), and as we will be severely impacted, we plan to utilise Japan’s strategic petroleum reserves,” she said.
Oil market volatility
The crude market has been hit by wild volatility since the United States and Israel began striking Iran at the end of February, with Tehran retaliating by attacking targets across the oil-rich Gulf and effectively shutting down the Strait of Hormuz.
The strait normally carries about 20 per cent of the world’s oil and gas supplies.
French Finance Minister Roland Lescure said countries’ announcements that they would release part of their strategic oil reserves were “undoubtedly part of a highly coordinated strategy”.
On March 10, member states of the IEA held crisis talks to assess the security of supply and the potential release of emergency stocks.
“In principle, we support the implementation of proactive measures to address the situation, including the use of strategic reserves,” the energy ministers of the G-7 said in a statement.
Mr Lescure said the meeting of the G-7 leaders would “no doubt discuss this issue of strategic reserves”.
“We need to send a very clear message, which is that if we cannot reopen the Strait of Hormuz, we will replace it with other oil that will come from elsewhere and circulate around the world,” he told broadcaster BFMTV/RMC.
‘Pumping less oil’
Ms Ipek Ozkardeskaya, a senior analyst at trading platform Swissquote, said 400 million barrels would still be a “meagre” amount compared with the roughly 45 million barrels that IEA countries consume every day.
“It would, therefore, be a temporary fix,” she said, adding that the announcement helped keep oil prices in check on March 11.
“The Middle East is now pumping less oil, around 6 per cent less, in reaction to the Iran war.”
Countries around the world have been left scrambling in response to the oil price spikes.
Bangladesh has deployed the army to guard oil depots, India has imposed tighter controls over natural and cooking gas, and French officials conducted inspections at petrol stations and fined those found to be inflating prices.
The 32 members of the IEA hold over 1.2 billion barrels of public emergency oil stocks, with a further 600 million barrels of industry stocks held under government mandates. AFP
