Record oil release amid Iran war backed by 32 countries
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The International Energy Agency has agreed to release 400 million barrels of oil, the largest such move in its history, to try to rein in crude prices which have soared due to supply shocks from the US-Israeli war with Iran.
The IEA said the release had been backed unanimously by 32 member countries, including Australia, in the sixth such move it has made since its creation in the 1970s.
It is aimed at preventing a further rise in oil prices on fears that Iranian attacks will continue to block Middle East oil exports from reaching markets.
“The oil market challenges we are facing are unprecedented in scale, therefore I am very glad that IEA member countries have responded with an emergency collective action of unprecedented size,” IEA executive director Fatih Birol said.
The Paris-based IEA made its comments as French President Emmanuel Macron chaired a meeting of G7 leaders to discuss the issue.
“The emergency stocks will be made available to the market over a time frame that is appropriate to the national circumstances of each member country,” the IEA said, adding this would be “supplemented by additional emergency measures by some countries”.
US President Donald Trump, who launched attacks on Iran alongside Israel on February 28, was shown at the end of a video of the G7 meeting chaired by Macron saying: “I think we are having a tremendous impact on the world”.
Yet oil prices rebounded on Wednesday as markets doubted whether the IEA’s plan could offset the volumes of oil blocked by the conflict.
Analysts have said the pace of daily IEA stock releases would matter as much as if not more than the overall size.
If 100 million barrels were released over the next month, the daily pace will amount to about 3.3 million barrels per day – a fraction of the current disruption of about 20 million barrels per day, with the Strait of Hormuz between Iran and Oman effectively blocked.
In 2022, IEA member countries released 182.7 million barrels of oil and oil products in two stages, which was then the largest in IEA history, when Russia launched its full-scale invasion of Ukraine.
“Pressure came mainly from the US government which wants this release,” a European Union diplomat had said, speaking before the IEA statement.
In the G7 video, Trump said he agreed with the IEA decision.
US Interior Secretary Doug Burgum had welcomed initial reports of the planned release of oil reserves, while saying in an interview with Fox News that he did not believe the world was facing an energy shortage.
“We’ve got a transit problem, which is temporary,” he said.
“You have a temporary transit problem that we’re resolving militarily and diplomatically, which we can resolve and will resolve.”
G7 member Japan said it planned to release about 80 million barrels from its private and state oil reserves as its contribution.
“Rather than wait for formal IEA approval of a coo-rdinated international reserve release, Japan will act first to ease global energy market supply and demand, releasing reserves as early as the 16th of this month,” Prime Minister Sanae Takaichi said in a statement.
Several countries co-ordinate their strategic oil stockpiles through the IEA, which was formed in 1974 after the oil crisis.
IEA members hold emergency stockpiles of more than 1.2 billion barrels, with another 600 million in industry stocks held under government obligation.
Reuters