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Amid Strait of Hormuz blockade, world energy body to release oil from emergency reserves
Out of the planned releases of the oil, 72 per cent are in the form of crude while 28 per cent will be oil products.
Amid Strait of Hormuz blockade, the International Energy Agency said on Sunday that oil from its reserves will begin flowing to global markets soon. The agency said that its members countries have pledged as many as 411.9 million barrels.
The IEA statement gave a breakdown of the source of these barrels and said that the government of the member countries have committed to make 271.7 million oil barrels from government stocks, 116.6 million barrels from obligated industry stocks and the remaining 23.6 million barrels from other ways.
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Out of the planned releases of the oil, 72 per cent are in the form of crude while 28 per cent will be oil products.
Hinting at the timeline of the releases of these barrels, the IEA said that Asia Oceania countries will release the barrels from their stocks immediately while Europe and the Americas will do so by the end of March.
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According to the IEA, this is the sixth time that its member countries have taken emergency collective action to support oil markets in the history of the IEA, which was created in 1974. Previous collective actions were taken in 1991, 2005, 2011, and twice in 2022, it said.
“The war in the Middle East is creating the largest supply disruption in the history of the global oil market. This emergency collective action, by far the largest ever, provides a significant and welcome buffer. But the most important factor in ensuring a return to stable flows is the resumption of regular transit of shipping through the Strait of Hormuz. Adequate insurance mechanisms and physical protection for shipping are key to the resumption of flows,” the IEA said in its statement.
The global energy body's decision to release oil from its reserve comes a week after the energy body said that due to the ongoing war between Iran and the United States, Israel, the global oil supply chain has seen the biggest ever disruption in history. The oil prices also rose to as high as $100 per barrel on Friday with no indication of de-escalation in the ongoing conflict so far.
