IEA Plans 400m Barrel Oil Release to Offset Global Supply Shortage

The International Energy Agency (IEA) has announced plans to release 400 million barrels of oil to ease the global supply shortage.

IEA’s Executive Director, Fatih Birol, announced this on Wednesday during a broadcast monitored by Nairametrics.

The IEA chief said this followed a unanimous agreement by member countries after disruptions caused by the United States-Israeli war against Iran.

What the IEA is saying 

Birol said the IEA would be launching what he called the largest oil release in the agency’s 50-year history.

• “Dear colleagues, as a result of the discussions among IEA members, I can now announce that IEA countries have unanimously decided to launch the largest ever release of emergency oil stocks in our agency’s history.
• “IEA countries will be making 400 million barrels of oil available to the market to offset the supply lost due to the effective closure of the strait. 
• “This action aims to alleviate the immediate impact of disruption in markets,” he announced.

The IEA director, however, said while this would alleviate the current situation, the most important thing for a return to stable flows of oil and gas is the resumption of transit through the Strait of Hormuz.

• “Dear colleagues, in this context, the IEA will continue to monitor the market and make further recommendations to IEA members,” he added.

Backstory 

The development follows discussions by Group of Seven (G7) finance ministers on plans for a joint release of oil from emergency reserves coordinated by the IEA.

• The discussions were held on Monday amid the ongoing conflict in the Middle East, which has affected global oil prices.
• The G7 is a group of major advanced economies that meet to discuss global economic issues, security, and international policy.

They comprise Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.

What you should know 

Iran’s military command has warned that global oil prices could surge to $200 per barrel after three ships were attacked in the Strait of Hormuz, further escalating tensions in one of the world’s most critical oil transit routes.

The warning was issued on Wednesday by Ebrahim Zolfaqari, spokesperson for Iran’s military command, following renewed strikes in the region as the conflict involving Iran, Israel, and the United States intensifies.

• This follows Tuesday’s threat to block oil shipments from the Middle East if attacks by the United States and Israel continued.
• The warning also followed growing fears as the conflict continues to disrupt the Strait of Hormuz, one of the world’s most important energy corridors.
• Although U.S. President Donald Trump had suggested that vessels passing through the strait could be escorted by the U.S. Navy, he also warned Iran against interfering with oil shipments from the region.

The latest developments come as oil markets, which had rallied sharply earlier in the week, showed signs of stabilising in recent days as investors bet that the conflict could be resolved quickly.

However, renewed attacks in the Strait of Hormuz, a narrow passage along Iran’s coast that handles about one-fifth of global oil shipments, have revived concerns about fresh supply disruptions.