The International Energy Agency is reportedly proposing the largest release of oil reserves in its history to bring down crude prices that have soared during the US and Israel’s war on Iran.
The release would outstrip the 182m barrels of oil put on the market by IEA countries across two releases in 2022 after Russia’s full-scale invasion of Ukraine, the Wall Street Journal reported, citing unnamed officials.
The proposal is said to have been circulated at an emergency meeting on Tuesday of energy officials from the IEA’s 32 member states to decide whether to make their emergency stocks available to the market.
The countries are due to decide whether to back the plan on Wednesday, which could be delayed if even one member objects, the WSJ reported.
The IEA holds strategic reserves of petroleum as part of an emergency system designed to help countries withstand oil price crises.
Members of the body, which was set up after the Middle East oil crisis in the 1970s, are required to hold at least 90 days’ worth of crude supplies in reserve, which can be released to the market in the event of a supply shock.
In total, IEA members hold more than 1.2bn barrels of public emergency oil stocks and a further 600m barrels of stocks held by industry under government obligation.
Global shipments of oil and seaborne gas have struggled to move for more than a week as result of the effective closure of the strait of Hormuz, a key shipping lane off the coast of Iran through which about a fifth of global oil and seaborne gas tankers pass.
The price of Brent crude has fluctuated wildly in recent days, briefly jumping as high as $119.50 a barrel on Monday, which took it to levels not seen since 2022.
On Wednesday morning it was reported that the G7 group of leading economies supports, in principle, the use of strategic oil reserves to address supply shortages and market volatility.
Energy ministers from the seven countries held a remote meeting on Tuesday, along with the head of the IEA, to discuss whether to release emergency oil stocks to try to stabilise the situation after the historic market price gains recorded in recent days.
However, the oil price continued to move higher after the announcement, with the price of Brent crude, the international benchmark, rising from about $87.5 a barrel to above $91. The increase suggests markets are not entirely convinced the move will be enough to offset potential supply shocks.
“Working alongside the IEA, we are vigilantly monitoring energy market trends and are coordinating within the G7 and with our international partners, IEA member countries, and beyond,” G7 energy ministers said in a statement.
The G7 ministers added that they supported in principle the “implementation of proactive measures to address the situation, including the use of strategic reserves”.
