The International Energy Agency has agreed to release the largest volume of emergency oil reserves in its history to counter the effects on energy markets of the war in the Middle East.
The Paris-based organization will make 400 million barrels of oil available from its members’ emergency reserves.
It’s a larger stock than the 182.7 million barrels that were released in 2022 by the IEA’s 32 member countries in response to Russia’s full-scale invasion of Ukraine.
“Without sufficient routes to market and with no more available storage, Middle East oil producers have started to reduce production,” IEA executive director Fatih Birol said.
“And we have seen further attacks and damage to energy and energy-related infrastructure. Refinery operations have also been disrupted, with major implications for jet fuel and diesel supplies in particular.”
IEA member countries currently hold over 1.2 billion barrels of public emergency oil stocks, with a further 600 million barrels of industry stocks held under government obligation.
In response to U.S. and Israeli strikes, Iran has attacked commercial ships across the Persian Gulf, escalating a campaign of squeezing the oil-rich region as global energy concerns mount.
Iran has effectively stopped cargo traffic in the narrow Strait of Hormuz through which about a fifth of all oil is shipped from the Persian Gulf toward the Indian Ocean. It has also targeted oil fields and refineries in Gulf Arab nations, aiming at generating enough global economic pain to pressure the United States and Israel to end their strikes.
Germany and Austria said earlier Wednesday they would release parts of their oil reserves following an IEA request for members to release the record 400 million barrels to help temper energy price spikes due to the Iran war. Japan also said it will release some of its reserves starting Monday.
Group of Seven energy ministers met Tuesday at IEA headquarters in Paris to look at ways to bring down prices. Birol said afterward that they discussed all available options, including making IEA emergency oil stocks available to the market.
The IEA reserves were established in 1974 following the Arab oil embargo.
“This is a major action aiming to alleviate the immediate impacts of the disruption in markets,” Birol added. “But, to be clear, the most important thing for a return to stable flows of oil and gas is the resumption of transit through the Strait of Hormuz.”
The G7 is comprised of the leading industrialized nations of Canada, the United States, France, Italy, Japan, Germany and Britain. Austria is not a member. The group’s leaders were set to hold a meeting via videoconference later Wednesday to discuss energy issues.
The German economy ministry, Katherina Reiche, said the IEA asked Germany to release 2.64 million tons of its oil reserves. It was not immediately clear how much Austria was releasing.
She said it would take a couple of days before the delivery of the first quantities.
“Germany stands behind the IEA’s most important principle of mutual solidarity,” Reiche said.
The G7 energy ministers announced Tuesday that they supported in principle “the implementation of proactive measures to address the situation, including the use of strategic reserves.”
According to the IEA, export volumes of crude and refined products are currently at less than 10% of prewar levels.
Austrian Economy Minister Wolfgang Hattmannsdorfer said his country was releasing part of the emergency oil reserve and extending the national strategic gas reserve, adding: “One thing is clear: in a crisis, there must be no crisis winners at the expense of commuters and businesses.”
The German government also said it will introduce a measure to allow gas stations in Germany to raise fuel prices no more than once a day. The federal government wants to introduce this as quickly as possible, Reiche said.
In Austria, starting Monday, price increases at gas stations will be allowed only three times a week, the country’s economy minister said.
IEA nations have released emergency stocks on five previous occasions: During the 1990-1991 Gulf War, after Hurricane Katrina in 2005, during the Libyan civil war in 2011, and twice after the Russian invasion of Ukraine.
