The International Energy Agency announced Wednesday that it will release 400 million barrels of oil from emergency reserves to address supply shocks resulting from the war in the Middle East.
The IEA - an intergovernmental organization based in Paris that provides policy analysis and advice for its 32 member nations, with the goal of maintaining energy security - did not provide a timeline for the release. Member nations, which include the U.S. and most of Europe, are required to hold 90 days' worth of oil supplies, roughly 1.2 billion barrels, which the IEA can release during times of crisis to stabilize world markets. The organization has made emergency releases a handful of times since its founding in 1974, including during the Gulf War in 1991 and in response to hurricanes in the Gulf of Mexico in 2005.
"This is a major action aiming to alleviate the immediate impacts of the disruption in markets," said Fatih Birol, IEA's executive director, per the Associated Press. "But, to be clear, the most important thing for a return to stable flows of oil and gas is the resumption of transit through the Strait of Hormuz."
In response to an attack by the U.S. and Israel 12 days ago, Iran has targeted energy infrastructure throughout the Persian Gulf and attacked shipping across the region. IEA estimates that global energy supplies are about 20% lower than before the war began, with Asian nations in particular feeling the pinch from a loss of natural gas shipments.
Following the IEA's announcement, President Trump said the U.S. would release supplies of oil from the U.S. Strategic Petroleum Reserve, though he suggested that the initial release would be small and it wasn't clear if he would coordinate with IEA on the release. The U.S. reserve currently holds about 415 million barrels of oil, well below its maximum level of 714 million barrels.
"We'll do that, and then we'll fill it up," Trump said during an interview in Ohio. "I filled it up once, and I'll fill it up again, but right now, we'll reduce it a little bit, and that brings the prices down."
Some analysts say the reserve release will have only a modest effect on prices, with little improvement to be expected until the underlying problem is solved. Neil Crosby of the commodities analytics firm Sparta said the IEA release will be "a little Band-Aid" overall. "This scenario was always written off by large parts of the industry: In case we get to the scenario of where there's a war with Iran, the U.S. Navy will ensure that Hormuz doesn't stay closed," he told the Associated Press. "And then we got there, and it's closed. ... It's a complete disaster."