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The International Energy Agency (IEA) is to recommend the release of 400 million barrels of oil, the largest such move in IEA history, to try to restrain soaring crude prices amid the US-Israeli war with Iran.
A source said the release would be spaced over at least two months, while Spain’s energy minister said countries would have up to 90 days to release that volume.
Germany’s Economy Minister Katherina Reiche confirmed the 400 million barrel figure and said her country would participate in the release, details of which were still to be clarified. The US and Japan would be the largest contributors to the IEA release, she added.
The IEA did not immediately respond to a request for comment.
Acting ahead of the IEA move, G7 member Japan announced plans to release 15 days’ worth of private-sector oil reserves and one month’s worth of state oil reserves.
“Rather than wait for formal IEA approval of a coordinated international reserve release, Japan will act first to ease global energy market supply and demand, releasing reserves as early as the 16th of this month,” Prime Minister Sanae Takaichi said in a broadcast statement.
The Paris-based IEA would publish its recommendation at 1300 GMT on Wednesday, ahead of a 1400 GMT meeting of G7 leaders chaired by France, according to three sources.
In 2022, IEA member countries released 182.7 million barrels in two stages, which was then the largest in IEA history, when Russia launched its full-scale invasion of Ukraine.
“I would say it is the largest proposal in the history of the International Energy Agency,” said Sara Aagesen, Spain’s energy minister.
“During the war in Ukraine, they were talking about releasing around 182 million barrels, and now it’s an amount that is more than double their proposal,” she added.
Western economies coordinate their strategic oil stockpiles through the IEA, which was formed after the 1970s oil crisis.
French President Emmanuel Macron is due to chair the meeting of G7 leaders later on Wednesday after the bloc said its energy ministers supported the use of reserves.
“In principle, we support the implementation of proactive measures to address the situation, including the use of strategic reserves,” the G7 energy ministers said.
One G7 source told Reuters that although no country currently faced a physical shortage of crude, prices were rising sharply, and leaving the situation unattended was not an option.
However, any actual release cannot start immediately because decisions on aspects such as country allocations and timing require further discussion, the source said.
“The IEA secretariat is expected to propose scenarios, based on expected market impact, and outreach may extend to non-IEA members like China and India,” the source said.
IEA member South Korea is participating in the discussion “and reviewing its position,” a spokesperson for the country’s industry ministry said on Wednesday.
Oil prices rebounded on Wednesday as markets doubted whether the International Energy Agency’s reported plan for a record release of oil reserves could offset potential supply shocks from the U.S.-Israeli conflict with Iran.
Meanwhile oil prices rebounded on Wednesday as markets doubted whether the International Energy Agency’s plan for a record release of oil reserves could offset potential supply shocks from the U.S.-Israeli conflict with Iran.
Brent futures traded up $3.31, or 3.8%, at $91.11 a barrel by 1159 GMT. US West Texas Intermediate (WTI) traded $3.13 higher, also 3.8%, at $86.58 a barrel.
Both contracts extended losses in early Asian trade, after plunging more than 11% on Tuesday, despite US crude prices leaping 5% at the market’s opening.
The IEA is expected to recommend the release of 400 million barrels of oil, the largest such move in the agency’s history, to try to rein in energy prices amid the US-Israeli war with Iran.
Such a volume would be more than double the 182 million barrels released in 2022 following Russia’s invasion of Ukraine.
A source said the release would be spaced over at least two months, while Spain’s energy minister said countries would have up to 90 days to release that volume.
In a note to clients, Goldman Sachs analysts said that a stockpile release of even 182 million barrels would offset 12 days of the investment bank’s estimated 15.4 million-barrel-per-day Gulf exports disruption.
“ doesn’t look like the oil market thinks that ‘largest ever’ release of strategic reserves will help much against current crisis,” SEB analyst Bjarne Schieldrop said.
The US and Israel pounded Iran on Tuesday with what the Pentagon and Iranians on the ground called the most intense airstrikes of the war.
Reuters
