IEA: Additional Oil Reserves Can Still Be Mobilized if Needed

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Source: Wall Street Journal

The International Energy Agency (IEA) stated on Monday that additional oil reserves can still be mobilized if needed. The current emergency release only reduces IEA’s reserves by about 20%. However, Birol also said that while releasing reserves can provide a buffer for now, it is not a long-term solution. The IEA has begun studying demand-side measures to propose relevant recommendations to further ensure energy security. U.S. crude oil prices fell more than 5 intraday.

The IEA announced on Monday that additional oil reserves can still be used if necessary. Last week, the agency announced a record release of oil reserves to mitigate the impact of the Iran conflict.

IEA Executive Director Fatih Birol said in a televised statement that the ongoing emergency release will only reduce IEA’s reserves by about 20%. “We still have over 1.4 billion barrels of reserves, which means we can take further action if needed in the future.”

The Middle East conflict has nearly halted shipping through the crucial Strait of Hormuz, forcing some of the world’s largest oil-producing countries to cut production and causing oil prices to surge over 40% in two weeks, rising above $100 per barrel. Last week, the IEA stated that this crisis is the largest supply disruption in the history of the oil market.

However, Birol also said that while releasing reserves can provide a buffer, it is not a long-term solution. He emphasized that the most important step is to reopen the Strait of Hormuz.

Birol said that Asian markets are currently receiving more additional crude oil supplies. Asia relies most heavily on Middle Eastern oil transportation, making it the region most affected by the supply shortage. Major oil-producing countries like Iraq, due to transportation disruptions, have already lost a significant portion of oil revenue.

As part of the IEA coordinated response, Asian countries have pledged to release over 100 million barrels of oil reserves, Europe will release about 100 million barrels, and the Americas will release over 170 million barrels. Additionally, an extra 20 million barrels will be supplied by increasing production. Birol mentioned that other countries supporting the IEA’s actions include India, Colombia, Singapore, Thailand, and Vietnam.

Birol also stated that the IEA has begun studying demand-side measures to propose relevant recommendations to further ensure energy security.

On Monday, driven by expectations that the disruption of transportation through the Strait of Hormuz might ease and that multiple countries may release more crude reserves, international oil prices retreated. WTI April crude futures fell more than 5%, trading at $93.50 per barrel.

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Editor: Zhao Siyuan