IEA Announces Historic 400 Million Barrel Oil Release Amid Hormuz Crisis

"The largest supply disruption in the history of the global oil market"

The International Energy Agency (IEA) has agreed to release 400 million barrels of oil from the emergency reserves of its member countries, marking the largest coordinated release in the organization's history. This action responds to significant disruptions in global energy markets caused by the closure of the Strait of Hormuz and ongoing conflict in the Middle East.

Context of the Supply Disruption

The Strait of Hormuz, a narrow maritime corridor off Iran's coast, typically sees approximately 20% of global oil and liquefied natural gas transit. According to multiple reports:

• Tanker traffic through the Strait has been halted or severely restricted for nearly eight consecutive weeks due to the conflict.
• Current shipments through the strait are less than 10% of pre-conflict levels, which were 15 million barrels per day (bpd) in 2025.

The IEA has described the situation as "the largest supply disruption in the history of the global oil market." Consulting firms Rapidan Energy Group and Wood Mackenzie have identified the closure of the Strait as the biggest oil supply disruption in history.

The conflict has led to attacks on energy infrastructure, including oil tankers and refineries in major Gulf producing nations, resulting in production shutdowns. Iran has issued a statement threatening to prevent any oil from transiting Hormuz amid continued hostilities.

Impact on Global Oil Supply and Markets

The IEA estimated that global oil supply dropped by 10.1 million bpd in March 2022 to 97 million bpd. IEA Executive Director Fatih Birol stated that approximately 13 million bpd of oil supply has been lost. Current crude production has reportedly decreased by at least 8.0 million bpd.

Oil prices have experienced significant volatility since the conflict began:

Global benchmark Brent crude initially reached nearly $120 a barrel before falling below $90

Prices were approximately $70 before the conflict. Oil prices on Thursday were reported around $100 per barrel.

The IEA has reduced its oil supply growth forecast for 2026 from 2.4 million bpd to 1.1 million bpd.

The IEA's Response: Record Oil Release

On Wednesday, the IEA announced that its member nations would release a total of 400 million barrels from their strategic oil reserves. This unanimous decision marks the largest coordinated release of crude oil ever by the IEA. This is only the sixth instance the group has released oil to balance crude markets.

Key Details of the Release

• The IEA did not specify a timeline for when the stocks would enter the market, stating it would be appropriate to the circumstances of each of its 32 member countries.
• IEA Executive Director Fatih Birol confirmed the unanimous decision, noting the significant impacts of the conflict on global oil and gas markets, energy security, affordability, and the global economy.
• Birol described the emergency release as a "major action" to alleviate market disruption and "helping to reduce the pain," but not a "cure."

"The cure is opening up the Strait of Hormuz." — IEA Executive Director Fatih Birol

Market Mitigation Efforts and Limitations

Efforts to ease market pressure include redirecting oil via pipelines, such as Saudi Arabia's pipeline to the Red Sea, and the U.S. waiving sanctions on Russian crude. However, analysts have indicated that these measures and the IEA release cannot fully offset the disruption caused by the conflict.

Angie Gildea of KPMG stated that "there is simply no substitute for restoring access through the Strait of Hormuz," and current tools offer only "relief at the margins," not "structural solutions."

Energy analysts have indicated that even the IEA's maximum drawdown capability might not fully offset the nearly 20 million barrels per day that typically transit the Strait.

Outlook and Future Actions

The IEA report indicates "no signs of a de-escalation in hostilities or a clear timeline for a recovery in flows through the Strait." The agency noted that the coordinated emergency stock release is a "stop-gap measure" without a swift resolution to the conflict. Even if shipments resume, clearing the backlog of tankers would take "several days to weeks."

Japanese Prime Minister Sanae Takaichi has requested the IEA to coordinate an additional release of oil stocks, stating the request was made "to prepare to implement an additional release in case the situation drags on." Japan announced its intention to release oil stockpiles from its national reserves independently, without waiting for the official IEA decision.

IEA Chief Fatih Birol stated the agency is "ready to move forward" with an additional release "if and when necessary."

Birol noted that the initial release represented 20% of the IEA's total stocks, with 80% still remaining.

Birol predicted that even if the situation returns to normal, high prices and volatility will persist for a long time. He told Turkish newspaper Dünya:

"The era when the global economy was critically dependent on a single strait is becoming history."

Background on the IEA

The IEA was established after the 1970s oil crisis to protect oil consumers' interests and coordinate national stockpiles as a buffer against extreme shocks to global oil supplies. It serves as a counterpart to OPEC, which represents oil-producing nations.

The IEA comprises 32 member countries, primarily advanced economies in Europe, North America, and Northeast Asia, alongside "association countries" such as China and India. Together, these countries account for 80% of global energy demand.

Membership requires maintaining reserves equivalent to at least 90 days of imports and implementing programs to reduce oil dependency. The U.S. Strategic Petroleum Reserves (SPR) currently hold about 415 million barrels out of a 715 million barrel capacity.

Impact on European Supply

Regarding European supply, the EU imported around 9.1 million bpd in 2024. An EU Commission spokesperson stated on Thursday that the bloc does not have immediate concerns regarding the security of its oil supplies.