The International Energy Agency (IEA) agreed Wednesday to release 400 million barrels of oil from strategic reserves, the largest such release in its history, in a bid to stabilize global markets rattled by escalating conflict in the Middle East and fears of disrupted oil supplies.
The move, unanimously backed by 32 member countries, comes as Iran has launched attacks on commercial ships and targeted Dubai International Airport, escalating a campaign to disrupt oil flows through the Persian Gulf. The IEA stated the release is intended to counter the potential for further price increases stemming from concerns over Iranian actions blocking Middle East oil exports.
“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,” said IEA Executive Director Fatih Birol.
The decision was made as French President Emmanuel Macron convened a meeting of G7 leaders to address the crisis. The IEA indicated the emergency stocks would be released over a timeframe tailored to the individual circumstances of each member nation, and potentially supplemented by additional measures from some countries.
Despite the IEA’s action, oil prices rebounded Wednesday, suggesting market skepticism about the release’s ability to fully offset the disruption caused by the conflict. Analysts point out that the effectiveness of the release will depend heavily on the pace at which the oil is made available. A release of 100 million barrels over the next month would equate to approximately 3.3 million barrels per day, a fraction of the estimated 20 million barrels per day currently disrupted, with the Strait of Hormuz effectively blocked, according to industry assessments.
The conflict began February 28 with surprise U.S. And Israeli airstrikes against Iranian targets. Iran has vowed to block oil exports to its adversaries, stating it would not allow “even a single liter” to be shipped, according to a U.S. Assessment of the situation.
The Canadian Security Intelligence Service has reportedly increased vigilance to prevent potential extremist violence on Canadian soil, according to CBC News. Canada’s position, as stated by an official, is that it “will never participate” in the U.S.-Israeli attacks on Iran.
Reports indicate at least 1,270 people have been killed in Iran, at least 570 in Lebanon, and at least 13 in Israel as a result of the conflict. Lebanese officials report an additional 700,000 people have been displaced from their homes.
The IEA’s emergency release is the sixth such action in its history, and the largest. The agency’s previous largest release was in 2011, in response to disruptions caused by unrest in Libya. The current situation, however, presents a more complex challenge, with direct attacks on oil infrastructure and shipping routes.
U.S. President Donald Trump, speaking at the conclusion of the G7 meeting, stated, “I think we are having a tremendous impact on the world.”
The Iranian response to the ongoing U.S.-Israeli campaign has included laying sea mines in the Strait of Hormuz, further impeding oil tanker traffic and contributing to rising global energy prices.
