Epic oil release! IEA or plans to release up to 400 million barrels of crude oil, far exceeding the scale during the conflict between Russia and Ukraine.

According to informed sources, the International Energy Agency (IEA) is proposing to release emergency oil reserves, which would be the largest such release in the agency's history, with the decision expected to be announced later on Wednesday. The sources said that the IEA is proposing to release around 300 to 400 million barrels of oil reserves. The Paris-based agency is responsible for coordinating the release of oil reserves among member countries of the Organisation for Economic Co-operation and Development (OECD). Governments around the world are currently trying to contain the surge in energy prices sparked by escalating tensions in the Middle East. On Monday, oil prices in London soared to nearly $120 per barrel as key shipping lanes in the Persian Gulf, including the Strait of Hormuz, were largely shut down. However, oil futures later dropped significantly, partly due to market expectations that countries would tap into their oil reserves. French Economy Minister Roland Lescure revealed that the Group of Seven (G7) leaders meeting on Wednesday will discuss the release of reserves. The G7 has indicated its support for "positive measures," including the release of strategic oil reserves, but has not disclosed the specific scale of intervention. The IEA has not responded to requests for comment on the proposal. The proposed release would exceed the 182 million barrels released by IEA member countries after the outbreak of the Russia-Ukraine conflict in 2022. According to the IEA, its 32 member countries collectively hold over 1.2 billion barrels of public emergency oil reserves, including the largest holding in the United States' Strategic Petroleum Reserve; in addition, there are 600 million barrels of government-controlled commercial stocks. Production cuts Oil-producing countries such as Saudi Arabia, the UAE, and Iraq are increasing production cuts, leading to a global reduction in crude oil output by approximately 6%. Transportation in the Strait of Hormuz has been disrupted, causing continuous backlogs in crude oil inventories in the region. On Tuesday, the UAE's largest refinery, Ruwais, was temporarily shut down as a security precaution after a nearby drone attack. Some traders and analysts question whether consuming countries' governments can tap into their reserves quickly enough to fill the significant supply gap. Citigroup estimates that daily crude oil supply losses in the Persian Gulf region currently amount to 11-16 million barrels. Even if the US Strategic Petroleum Reserve is released at maximum speed, combined with the releases from other IEA member countries, it would only partially fill the gap. The US Department of Energy website shows that the maximum daily release capacity of the US Strategic Petroleum Reserve is 4.4 million barrels, and it takes 13 days to enter the public market after a presidential order. The IEA has intervened in a similar manner five times before: on the eve of the Gulf War in 1991, after Hurricanes Rita and Katrina in 2005, after the outbreak of the Libya civil war in 2011, and twice in 2022 in response to supply disruptions related to the Russia-Ukraine conflict.