In an aerial view, the Strategic Petroleum Reserve storage at the Bryan Mound site is seen on October 19, 2022 in Freeport, Texas.
Brandon Bell | Getty Images News | Getty Images
The International Energy Agency on Wednesday agreed to the largest-ever oil release from its strategic reserves as governments seek to cap a spike in crude prices unleashed by the sprawling Middle East crisis.
The emergency measure comes as the Iran war continues to choke off traffic through the strategically vital Strait of Hormuz.
Energy analysts warned ahead of the release that even the IEA’s maximum drawdown capability would likely not be able to offset the nearly 20 million barrels per day that typically transits through the Strait of Hormuz.
The waterway is a narrow maritime corridor off Iran’s coast that connects the Persian Gulf and the Gulf of Oman. Roughly 20% of global oil and gas usually passes through it.
Oil prices have been extremely volatile since the outbreak of the Iran war on Feb. 28, with global benchmark Brent crude rallying to nearly $120 a barrel at the start of the week, before falling back below $90.
Earlier in the day, Japanese Prime Minister Sanae Takaichi said the country intended to release oil stockpiles from its national reserves as early as next week, citing an “exceptionally high level of dependence” on the Middle East.
“Without waiting for an official decision on the release of international stockpiles in cooperation with the International Energy Agency (IEA), Japan has decided to take the lead in releasing its stockpiles as early as the 16th of this month in order to ease supply and demand in the international energy market,” Takaichi told reporters, according to public broadcaster NHK.
The 32 members of the IEA currently hold more than 1.2 billion barrels of public emergency oil stocks, with a further 600 million barrels of industry stocks held under government obligation.
The global energy watchdog had previously released an estimated 182 million barrels of oil to support the energy market following Russia’s full-scale invasion of Ukraine in 2022.
This is a developing story. Check back for updates.
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