The International Energy Agency (IEA) has begun releasing its emergency reserves of oil to the market, with Asian members starting to deploy barrels on Monday, the head of the Paris-based agency said.
What happened: On March 11, the IEA said its 32 member states unanimously agreed to draw a record 400 million barrels from its emergency stocks to “address disruptions in oil markets stemming from the war in the Middle East”.
IEA Executive Director Fatih Birol said in a video statement on Monday: “As I speak right now, additional barrels of oil are flowing into the market in Asia.” Asian countries will release more than 100 million barrels to the market as part of the 400 million-barrel drawdown, he said.
Birol thanked several IEA member states that supported the release of reserves, including India, Colombia, Singapore, Thailand and Vietnam. The IEA chief said the drawdown includes both crude oil and refined products.
On Sunday, the IEA said oil reserves held by members in Asia and Oceania could be released immediately as part of the coordinated drawdown. Committed stocks from these regions stood at 108.6 million barrels as of Sunday, according to the IEA.
Commenting on the near closure of the Strait of Hormuz as a result of the US-Iran war, Birol said: “I very much hope the situation will be resolved quickly to enable markets to start recovering. But of course, we need to be prepared in case it continues to for a while longer,” adding that even after the deployment, IEA member states will still have 1.4 billion barrels of oil in reserves and more could be released.
“The security situation in the Middle East is still very much in flux. The IEA will continue to work very closely with governments around the world to discuss options to respond to the disruptions we are seeing,” Birol added.
Why it matters: The 400 million barrels of crude marks the energy body’s largest-ever release of oil reserves, with its previous one being in 2022 after Russia’s full-scale invasion of Ukraine. The IEA was founded in 1974 after the 1973 oil crisis to ensure security and international cooperation in the energy sector.
The move comes as oil prices have surged above $100 a barrel amid the near-closure of the Strait of Hormuz since the US-Israeli war with Iran began on Feb. 28. The vital waterway sees a fifth of the world’s oil and liquefied natural gas pass through it.
Know more: The IEA’s 32 members represent more than 1.2 billion barrels in government reserves and a further 600 million barrels in industry-held volumes stored under government obligation, the agency said in a March 11 statement.
Birol said on Monday that of the first oil release of the IEA member countries, the Asia Pacific and European ones will over 100 million barrels, while the Americas countries are releasing over 170 million barrels to the market.
He said consumers in developing economies in South and Southeast Asia are bearing the brunt of the energy crisis, because they depend on imports of liquefied petroleum gas (LPG) for activities like cooking. Much of the LPG is imported from the Middle East, and energy prices have risen sharply globally due to the war.
