Asia-Oceania will get oil first
The IEA said the first wave of emergency reserves would be made available most rapidly in the Asia-Pacific region, where supply tensions have been particularly acute.According to AFP, the agency said, “Individual implementation plans by member countries have been submitted to the IEA. These plans indicate that stocks will be made immediately available by IEA member countries in Asia Oceania.”“Stocks from IEA member countries in the US and Europe will be made available from the end of March,” it said.The announcement provides the clearest timeline yet for how exactly the emergency stock release will be phased out across all regions after the agency agreed earlier this week to tap the strategic stockpile.
IEA says, biggest oil shock in the history of the market
IEA members agreed on Wednesday to reduce oil stockpiles in response to war-induced price rises, the largest coordinated intervention of its kind to date.Describing the disruption as unprecedented, the IEA said: “The war in the Middle East is causing the largest supply disruption in the history of the global oil market.”It described the latest emergency stockpile release as the sixth in its history and the first since Russia’s invasion of Ukraine in 2022, calling it an “important and welcome buffer.”
Oil prices still near $100 despite reserve move
Despite record intervention, oil prices have not fallen much.The announcements have so far not had a major impact on crude oil prices, with oil still hovering around $100 a barrel, the highest level since 2022 and well above the sub-$70 levels seen before the war.This reflects market concerns that even a historic reserve release may not fully compensate for the loss of supply caused by the disruption of shipping routes in the Gulf.
Strait of Hormuz remains a major problem
The IEA clarified that the real solution lies not in mere reserve release, but in restoring normal tanker movement through the Strait of Hormuz.“The most important factor in ensuring the return of stable flows is the resumption of regular transit of shipping through the Strait of Hormuz,” the agency said.It said adequate insurance mechanisms and physical security for shipping will be critical to the restoration of flows.Iran has effectively blockaded the strategic strait since the war began with US-Israeli air strikes on Iranian targets on February 28.The waterway is one of the most important chokepoints in the global energy system and typically carries about one-fifth of gross oil shipments.
S&P says reserve release may provide only limited relief
S&P Global Energy has warned that the IEA’s sweeping plan to release 400 million barrels of emergency oil reserves may provide only limited relief if the Strait of Hormuz remains closed.S&P said the release will help markets adjust to existing imbalances, but there is uncertainty over whether oil will reach the regions that need it most, especially Asian markets, where reserves are depleting, news agency ANI reported.According to Jim Burkhardt, vice president and global head of crude oil research at S&P Global Energy, “There is too much oil that cannot be exported through the Strait of Hormuz and not enough to Asia, where stocks are running low. The market is seriously imbalanced and will continue to be so until the Straits reopen and upstream and downstream operations return to normal. It won’t happen soon”.The 400 million barrel release would take several months to compensate for the nearly 430 million barrel shortfall in global supply in March alone.
The global reserve push has gained momentum
The Paris-based IEA had previously agreed to make available 400 million barrels from members’ strategic reserves in 2022, up from the 182.7 million barrels released after the Ukraine war began.IEA member countries currently have more than 1.2 billion barrels of public emergency oil reserves, plus another 600 million barrels of industry stocks under government obligation.It also said countries such as Germany and Austria have already confirmed they will release part of their strategic reserves, while Japan said it would start removing stocks from Monday.The latest update from the IEA indicates that the emergency release is now moving from announcement to implementation. But with oil still near $100, tanker flows still disrupted and the Strait of Hormuz effectively closed, the market is betting that reserve barrels alone may not be enough to quickly stabilize global energy supplies.