IEA Announces Release of 400 Million Barrels of Strategic Oil Reserves, Japan and Germany Take the Lead

The International Energy Agency (IEA) announced that its 32 member countries reached a "unanimous decision" on Wednesday, March 11, to release 400 million barrels of crude oil from strategic reserves into the market. This is the largest reserve release in the agency's history. Earlier, Japanese Prime Minister Asako Kato stated that Japan would independently release its strategic oil reserves, with the action possibly starting as early as March 16.

According to Reuters, Fatih Birol, executive director of the energy agency under the Organisation for Economic Co-operation and Development (OECD), said in a video statement on Wednesday: "IEA member countries will provide 400 million barrels of oil to the market... to compensate for the supply gap caused by the 'actual closure' of the Strait of Hormuz."

According to statistics, this is the sixth time in IEA's history that the organization has coordinated the release of strategic oil reserves among its member countries.

Market Reaction and Doubts

Despite the IEA's announcement of a large-scale release plan, crude oil prices continued to rise on Wednesday. Traders doubted whether using strategic reserves would be sufficient to cover the gap amid the Asian supply crisis triggered by the conflict between the United States, Israel, and Iran.

However, the market did not fully accept this move. At closing, Brent crude rose 4% to $91.30 per barrel, while U.S. WTI crude climbed 3.22% to $86.19 per barrel.

At the beginning of this week, oil prices had declined from their high point since the war began on February 28, which was around $120 per barrel.

Fatih Birol, executive director of the IEA, said: "The challenges we currently face in the oil market are unprecedented; therefore, I am very pleased that IEA members have taken such a large-scale collective emergency action."

He added: "Energy security is the founding mission of the IEA, and I am glad to see the strong unity shown by the member states when taking decisive measures." He reminded that 15 million barrels of crude oil and 5 million barrels of petroleum products are transported through the Strait of Hormuz every day.

Reuters noted that the scale of this release is unprecedented in IEA history. The 400 million barrels released are more than twice the target set during the Russia-Ukraine war in 2022 (182 million barrels).

Pressure from Washington and Shared Responsibilities

According to a statement released on Wednesday, G7 energy ministers supported "taking proactive measures to address the situation, including using strategic reserves" in a video conference. A European diplomat revealed: "The pressure mainly came from the U.S. government, which strongly urged the release of reserves."

U.S. Interior Secretary Doug Burgum told Fox News that now is the "ideal time" to ease oil price pressures, but he denied there is a supply shortage: "We are facing temporary transportation issues, and we are addressing them through military and diplomatic means."

Japan Takes the Initiative

Founded in 1974, the IEA has 32 member countries including the United States, the United Kingdom, France, Germany, Japan, and South Korea. It requires member countries to maintain strategic oil reserves equivalent to at least 90 days of net oil imports from the previous year, and to use these reserves to stabilize the international market when there is a serious disruption in global oil supply. Historically, the IEA has only coordinated the release of strategic oil reserves five times, most recently to address the Russia-Ukraine conflict in 2022, releasing a total of 182 million barrels. The other three times were due to the first Gulf War, Hurricane Katrina, and the supply disruption in Libya.

On the 11th, the Japanese Ministry of Economy, Trade and Industry stated that Japan will release approximately 80 million barrels of strategic oil reserves. Previously, Japanese Prime Minister Asako Kato stated that Japan would independently release its strategic oil reserves, with the action possibly starting as early as March 16, releasing enough to cover 15 days of private sector oil reserves and one month of national oil reserves.

In Europe, Germany's economy minister announced that Germany will release 2.4 million tons of national oil reserves, with specific details still to be finalized. The UK will also release 13.5 million barrels.

French Economy Minister Roland Lescure stated that France has over 100 million barrels of public and private reserves. He emphasized: "We want to send a clear signal: if the Strait of Hormuz cannot be reopened immediately, we have the capacity to replace it."

According to market experts quoted by Reuters, the real challenge lies in the "speed of release" rather than the "total amount".

Even releasing 100 million barrels within a month would average about 3.3 million barrels per day, which is just a drop in the bucket compared to the usual daily flow of 20 million barrels through the Strait of Hormuz.

Source: rfi

Original: toutiao.com/article/1859380659541257/

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