IEA floats proposal for largest-ever oil release amid West Asia conflict

IEA members are considering a record release of oil from strategic reserves to stabilise global markets as the West Asia conflict disrupts supply and triggers sharp volatility in crude prices

The International Energy Agency (IEA) has floated a proposal for the largest ever release of oil from its strategic reserve in view of the soaring oil prices amid the West Asia conflict, reported The Wall Street Journal.

 

While the report, citing officials, did not specify the exact quantity of oil to be released, it indicated that the volume would exceed the 182 million barrels released by IEA members in 2022 following the outbreak of the Russia–Ukraine war. 

 

Earlier this week, the Financial Times quoted US officials as saying that a coordinated release of 300–400 million barrels could be appropriate to address the supply crunch and stabilise prices.

 

The US is one of the 32 members of the IEA. The Paris-based organisation’s reserves hold around 1.2 billion barrels of oil, along with another 600 million barrels in mandatory commercial inventories. Out of this, the US and Japan account for about 700 million barrels. 

 

The proposal to release oil was circulated during an emergency meeting of IEA members on Tuesday, with a decision on the plan expected on Wednesday, The Wall Street Journal reported. It further added that objections regarding the proposal from any of the members could delay the release. The oil from IEA's strategic reserves has been released five times since their creation, including twice in 2022 and ahead of the US-led military strikes against Iraq in 1991.

 

Latest uncertainty around oil supply surged after the US and Israel carried out strikes on Iran on February 28, prompting Tehran to retaliate with attacks on Israeli territory and American military bases across West Asia. The escalation has disrupted oil flows from the region and heightened concerns over a wider supply shock. It has further led to sharp price volatility, with Brent crude rising to $119 per barrel on Monday before dropping to around $90 on Tuesday and easing further to $85 on Wednesday.

 

According to global energy and natural resources consultancy firm Wood Mackenzie, given the supply disruption, global oil demand would need to fall to rebalance the market, a scenario that could push Brent crude to at least $150 per barrel in the coming weeks.