Tapping oil reserves seen not a lasting solution to price volatility
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admin
- March 17, 2026
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Global oil prices remain above $100 a barrel, having surged as a result of the US-Israeli war on Iran with shipping through the vital Strait of Hormuz coming to a near-halt. The International Energy Agency’s member countries could release more oil into the market from strategic stockpiles “as and if needed” after they have agreed the largest-ever reserves release to offset shortages and a spike in prices, its executive director Fatih Birol said on Monday. The IEA has described the crisis as the biggest supply disruption in the history of the oil market. As conflict chokes off oil exports from the Arabian Gulf, governments around the world are activating a critical line of defence against price shocks: emergency crude stockpiles. To ease surging prices, member nations of the International Energy Agency have agreed to release 400mn barrels from such reserves, which would be the group’s largest discharge ever. Among the stockpiles that will be tapped are the US Strategic Petroleum Reserve (SPR) created in the 1970s as a safety net against energy crises. Earlier, US President Donald Trump had expressed reluctance to release oil from the US reserve, characterising high energy prices as temporary. According to the IEA, the 38 mostly wealthy members of the Organisation for Economic Cooperation and Development (OECD) collectively have at least 1.2bn barrels of oil put aside in emergency public stores. The Paris-based energy group, which coordinates stockpile discharges for OECD countries, has helped implement five such interventions in the past: in the buildup to the 1991 Gulf War, after hurricanes Rita and Katrina in 2005, following the outbreak of civil war in Libya in 2011, and twice in 2022 in response to disruptions connected to the war in Ukraine. Among IEA members, the US has the largest buffer, which is made up of four heavily-guarded sites along the Gulf of Mexico. These deep and massive underground caverns have the capacity to hold more than 700mn barrels of oil. According to Energy Department data, they currently hold about 415mn barrels, so are just 60% full. The Trump administration plans to release 172mn barrels as part of the IEA’s coordinated effort. China — the world’s biggest oil importer — has in recent years built up what appears to be an even larger reserve capacity. The country has about 1.4bn barrels of crude in strategic storage, according to estimates from Columbia University’s Center on Global Energy Policy. As part of the IEA’s coordinated plan, countries in Asia committed to release well over 100mn barrels, with a similar amount in Europe and over 170mn barrels in the Americas, on top of “over 20mn barrels from increased production.” Analysts have questioned if the release will be sufficient to overcome the disruptions, and stressed that the pace of the release is also crucial. Birol has said further releases of stocks could only constitute a “buffer” against the current choking off of supplies, which has forced Gulf producers to slash production. Further releases from strategic reserves are “not a lasting solution.” Oil traders have expressed doubts about the extent of reserves making up for the oil that’s being choked off by the war. Even if the US SPR’s maximum drawdown rate is coupled with flows from other IEA members, it might cover just a portion of the millions of barrels of supply from the Gulf that’s being curtailed daily. It will take about 120 days to fully deliver the amount the US plans to release, according to the Energy Department. For sure, oil reserves can help alleviate market shortages, but they are generally viewed as a short-term emergency measure rather than a permanent solution. The historic 400mn barrel release is estimated to account for only about three–four days of global production, or roughly two weeks of the typical flow through the Strait of Hormuz.
