Nations agree to record oil reserve drawdown

The International Energy Agency (IEA) said its member countries will release 400 million barrels of oil from emergency reserves to curb surging global crude prices.

The move marks the largest coordinated release of oil reserves in history. The US will contribute the largest share, releasing 172 million barrels from its Strategic Petroleum Reserve (SPR).

IEA Executive Director Fatih Birol acknowledged that the current oil market pressures are “unprecedented in scale.”

The crisis stems largely from disruptions in the Strait of Hormuz, a key shipping route off Iran’s coast through which around 20% of the world’s oil and gas normally flows. Tanker traffic has nearly stopped as shipping companies fear attacks.

Oil prices have surged by as much as 40% since the US and Israel began their strikes on Iran.

Even with support from other IEA members, the SPR’s maximum drawdown may offset only part of the 11–16 million barrels per day that Citigroup estimates are lost from the Persian Gulf. According to analysts, roughly 20 million barrels pass through the strait each day.

Another concern is timing: US reserves form the bulk of IEA stockpiles but take around 13 days to reach markets after approval.

The conflict has also reduced global LNG supply by about 20%, tightening energy markets worldwide.

Record compared to the previous crisis
The previous record release came in 2022, when IEA members deployed 182.7 million barrels following the Russian invasion of Ukraine. Together, IEA members currently hold over 1.8 billion barrels of oil in emergency government and industry reserves.

The IEA was created in 1974, following the 1973 Arab–Israeli War oil embargo, to protect global energy security. 

Oil prices have swung sharply since the conflict began, with Brent crude oil nearing $100 per barrel. Meanwhile, West Texas Intermediate crude futures rose 4.6% to $87.25 per barrel.