Dozens of nations have agreed to release a record amount of oil from emergency reserves in an effort to calm global markets after prices surged due to the ongoing conflict involving Iran.
Members of the International Energy Agency (IEA) announced that all 32 member countries — including the United States and the United Kingdom — will release a combined 400 million barrels of oil. Officials say the move is meant to ease supply shortages triggered by the war between Israel and Iran.
Oil routes disrupted by war
A major factor behind the price spike is the disruption of oil shipments through the Strait of Hormuz, a narrow waterway that carries roughly 25% of the world’s seaborne oil supplies. Since the conflict escalated, exports through the strait have nearly stopped, and production across the region has dropped sharply.
As a result, global oil prices have climbed to nearly 25% higher than they were when the war began.
The IEA described the situation as a supply shock “unprecedented in scale,” prompting the historic decision to tap into strategic stockpiles.
Largest reserve release ever
The planned release of 400 million barrels is more than double the previous record, which occurred after the 2022 Russian invasion of Ukraine disrupted global energy markets.
Despite the massive number, experts say the impact will likely be temporary. The amount represents only three to four days of global oil supply, or about two weeks of the oil that normally flows through the Strait of Hormuz.
IEA member countries are required to maintain emergency reserves equal to 90 days of their national oil consumption. Together, those governments hold more than 1.2 billion barrels in strategic stockpiles, with another 600 million barrels held by industry under government rules.
How the reserves actually work
Strategic reserves are not stored in one central location. Companies such as Shell and BP keep oil at storage terminals, refineries, and other facilities around the world. Governments can designate some of those stocks as part of their emergency reserves.
Releasing the oil does not mean tankers immediately flood the market. Instead, producers make additional supplies available for refineries to purchase.
Even then, the process can be limited by another problem: refining capacity. Analysts say there are only so many refineries able to process crude oil into usable fuels.
A temporary fix
Energy experts warn that tapping emergency reserves can only provide short-term relief.
“Once you release them, they don’t exist,” said Nick Butler, a former head of strategy at BP.
Jorge Leon of Rystad Energy said the release will help stabilize markets but will not fully offset the supply shock.
“Everyone knew there would be a release of emergency reserves,” he said. “But prices haven’t come down as much as you would expect.”
Natural gas facing its own crunch
The crisis is also affecting natural gas markets. According to Fatih Birol, executive director of the IEA, the global market for liquefied natural gas (LNG) has become “very challenging.”
The conflict has caused a 20% drop in LNG supplies, pushing the benchmark UK LNG price about 70% higher since the war began.
Birol warned there are “few options” available to quickly solve the gas shortage.
Meanwhile, Ed Miliband, the UK’s energy secretary, said the coordinated oil release shows countries are working together to reduce the disruption.
“The UK is playing our part in working with our international allies to address the disruption in oil markets,” Miliband said.
While the record release may ease some immediate pressure, analysts say the long-term outlook will depend largely on whether oil shipments through the Strait of Hormuz can safely resume.
