Oil Reserve Release May Have Limited Impact on Rising Fuel Prices

International Energy Agency Announces Largest Release of Emergency Reserves

The International Energy Agency (IEA) has announced plans to release 400 million barrels of oil into the market in an effort to stabilize prices amid the ongoing conflict between the United States and Israel, and Iran. The move is expected to increase global oil supplies by about one-fifth.

As of Thursday morning, Brent crude had risen approximately 15% since the announcement, reaching around $100 per barrel. This represents a significant increase from pre-war levels, which were around $65 per barrel.

The IEA’s release is considered historic in scope and aims to temporarily address the massive shortfall in global oil supplies. Under normal circumstances, about 20 million barrels of oil pass through the Strait of Hormuz each day. However, since the start of the war, the global shortfall has exceeded 200 million barrels.

Market analysts suggest that the IEA’s release may offer some short-term relief but is unlikely to have a significant impact on lowering prices if the Strait of Hormuz remains effectively closed. The strait, which borders Iran, Oman, and the United Arab Emirates, has seen traffic come to an effective halt amid Tehran’s threats against shipping in the region.

At least five commercial ships were attacked in the region on Wednesday, including two oil tankers in the Iraqi port of al-Faw. US President Donald Trump has offered mixed messages on how long the war on Iran could last.

The IEA’s release is expected to be followed by other countries releasing their own portion of strategic reserves. The US Department of Energy plans to release its portion of the reserves, totaling 172 million barrels, beginning next week.

Source: Al Jazeera