More than 1.82 billion barrels! IEA is reported to propose the largest-ever release of strategic oil reserves.

According to informed officials who spoke to the media, the International Energy Agency (IEA) has proposed the release of the largest ever oil reserves to stabilize the sharp rise in oil prices during the US-Iran war. Officials stated that the scale of this release will surpass the total of 182 million barrels of oil released in two batches by IEA member countries after the 2022 Russia-Ukraine conflict erupted. The proposal was circulated at an emergency meeting of energy officials from the 32 member countries of IEA on Tuesday. Countries are expected to make a decision on the proposal on Wednesday. If no country opposes, the proposal will be passed; however, if one country raises objections, it could lead to a delay in the plan. As a result of this news, international oil prices fell during Asian trading on Wednesday. As of writing, WTI crude oil futures fell by 0.5% to $83.03 per barrel, after rising by more than 6% previously, while Brent crude oil futures fell by 3.53% to $87.84 per barrel. The IEA's proposal aims to address the severe supply disruptions caused by the almost complete closure of the Strait of Hormuz. This narrow waterway connects the Persian Gulf to the global markets, and approximately one-fifth of the world's oil supply is transported through this passage. Threats of Iranian attacks on oil tankers have almost paralyzed oil transport in the Strait of Hormuz. Following the 1973 oil crisis (Arab oil embargo), Western countries and their allies established the IEA in 1974. The organization sets guidelines for oil reserves for member countries and coordinates oil releases to protect economies from the effects of oil market volatility. Since the US and Israel's attacks on Iran on February 28, oil prices have soared by about 40%, reaching nearly $120 per barrel on Monday. However, the possibility of multiple countries jointly releasing oil reserves and US President Trump's statements about the "end of the basic war" have put pressure on oil markets to fall back. Economists warn that continued oil price increases could lead to inflation, stock market corrections, and increased burdens on fuel expenditures for the public. The Executive Director of the IEA, Fatih Birol, stated on Monday that IEA members have 1.2 billion barrels of public emergency oil reserves, in addition to 600 million barrels of mandatory commercial stocks. Roughly calculated, this is equivalent to approximately 124 days of supply disruption in the Gulf region. How effective have past releases of oil reserves been? Looking back at history, the effects of past releases of strategic oil reserves have been mixed. After the outbreak of the Russia-Ukraine conflict in early 2022, IEA member countries quickly released oil reserves twice. Initially, this led to a 20% increase in oil prices, as traders believed that releasing reserves indicated a more serious oil crisis than expected. However, analysts stated that releasing oil reserves ultimately helped lower oil prices. The release of reserves during the Gulf War in 1991 is considered the most successful intervention by the IEA, achieving the goal of market stabilization perfectly. On the night of the US-led "Operation Desert Storm" against Iraq, then-US President George H.W. Bush ordered the use of the US strategic oil reserve for the first time, and IEA member countries also simultaneously released reserves. On the first day of the attack by the coalition forces against Iraq, oil prices plummeted by over 20%. As the war situation became clear and Iraq's actual export losses were less than expected, oil prices quickly returned to pre-war levels. This article was reprinted from "Cailianshe," written by Bian Chun; GMTEight editor: Feng Qiuyi.