The International Energy Agency 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 U.S.-Israeli war with Iran.
- Record 400M Barrel Release: The IEA is proposing its largest-ever emergency release—roughly 400 million barrels—to offset the loss of 20 million barrels per day caused by the Strait of Hormuz closure.
- Market "Circuit Breaker": The announcement successfully cooled a massive price spike; after hitting nearly $120 on Monday, Brent crude retreated to approximately $90 as traders anticipated the influx of supply.
- Unanimity Required: While the G7 and major members like Japan and France have signaled full support, the plan requires unanimous approval from all 32 IEA member nations in today's emergency meeting to take effect.
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.
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.
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 U.S. and Japan would be the largest contributors to the IEA release, she added.
Analysts have said the pace of daily IEA stock releases would matter as much as if not more than the overall size. If 100 million barrels were released over the next month, the daily pace will amount to around 3.3 million barrels per day - a fraction of the current disruption of around 20 million barrels per day, with the Strait of Hormuz between Iran and Oman effectively blocked.
Oil prices rebounded on Wednesday as markets doubted whether the IEA's plan could offset potential supply shocks from the conflict.
The IEA did not immediately respond to a request for comment.
Three more vessels have been hit by unknown projectiles in the Strait of Hormuz, maritime security and risk firms said on Wednesday, bringing the number of ships struck in the region since the conflict began to at least 14 and underlining how dangerous it is for traffic.
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.
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.
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.
