Manny Ita –
Member countries of the International Energy Agency (IEA) have agreed to release 400 million barrels of oil into the global market in an effort to cushion supply disruptions triggered by the escalating war in the Middle East.
The decision, described as the largest release of emergency oil stocks in history, was announced on Wednesday by IEA Executive Director Fatih Birol during a live broadcast.
According to the agency, the move is intended to offset the impact of the near shutdown of the Strait of Hormuz, a critical shipping route for global oil supplies.
“IEA countries will be making 400 million barrels of oil available… to the market to offset the supply lost through the effective closure of the Strait (of Hormuz),” Mr Birol said.
“This is a major action aiming to alleviate the immediate impacts of the disruption in markets. But, to be clear, the most important thing for a return to stable flows of oil and (natural) gas is the resumption of transit through the Strait of Hormuz,” he added.
Mr Birol had earlier disclosed that IEA member countries currently hold more than 1.2 billion barrels of public emergency oil stocks, alongside an additional 600 million barrels held by industry operators under government obligations.
The planned release exceeds the 182 million barrels made available in two tranches in 2022 during the peak of the Russia–Ukraine War. In that same year, the United States also released 180 million barrels from its Strategic Petroleum Reserve.
Despite the scale of the intervention, analysts say the measure may have limited impact because the disruption in the Strait of Hormuz involves far larger volumes of crude.
The vital waterway, through which about one-fifth of the world’s oil supply passes daily, has become largely impassable to tankers due to security concerns linked to the ongoing hostilities.
Oil prices surged to nearly $120 per barrel earlier in the week as fears of prolonged supply disruptions rattled global markets and triggered declines in major stock exchanges.
Some price pressures eased after signals from world leaders that measures were being taken to cushion the shock. However, the crisis continues to generate economic consequences across several countries.
In Nigeria, consumers have already begun feeling the impact of the disruption, with petrol prices rising by more than 25 percent in major cities.
Fuel prices in Abuja increased from around ₦870 per litre to nearly ₦1,400 within a week of the outbreak of the conflict. Premium Times observed that several filling stations are now selling petrol at about ₦1,261 per litre or higher.
The price adjustments intensified after the Dangote Refinery revised its gantry prices for petrol and diesel twice within 48 hours as Brent crude climbed above $100 per barrel earlier in the week.
Although the refinery later announced a price reduction following a slight drop in crude prices, pump prices across many retail outlets have largely remained unchanged.
Analysts say the 400-million-barrel release may still be insufficient compared with the scale of the supply disruption.
Amrita Sen, founder of market intelligence firm Energy Aspects, noted before the IEA announcement that about 15 million barrels per day of crude and petroleum products were effectively trapped within the Strait of Hormuz.
According to Ms Sen, the volume of emergency stocks being released “would be absorbed in just 25 days,” meaning the measure could fall short of compensating for the supply losses.
Oil markets showed limited immediate response to the announcement. Brent crude rose nearly three percent to around $90 per barrel, while West Texas Intermediate (WTI) climbed more than 2.3 percent to about $85 per barrel.
Francesco Pesole, a strategist at ING, said the release could only offer temporary relief.
“The release of oil reserves would be a temporary measure, and only military de-escalation can drive crude sustainably lower,” he said.
Prospects for reopening the Strait of Hormuz remain uncertain amid reports that Iran has begun laying naval mines in the waterway. Two individuals familiar with intelligence reports cited by CNN said the activity had raised concerns about further disruptions.
Although the mining effort is believed to be limited so far, a report by the United States Congress indicates that Iran possesses roughly 6,000 naval mines.
Ben Emons, chief investment officer at FedWatch Advisors, said the development could deepen the crisis.
“Iran’s success in laying mines in the Strait has taken the crisis into a new dimension,” Mr Emons said.
“With a material military campaign shift, Iran’s chokehold on the Strait will intensify, with potentially more mines, given its capabilities. That is why the oil market views the IEA’s 400 million-barrel release as a water pistol, not a bazooka,” he added.
Oil prices have remained volatile over the past two days. Both Brent and WTI surged above $100 per barrel on Monday for the first time in nearly four years before dropping sharply the following day.
Brent later settled about 11 percent lower at $87.80 per barrel, its largest single-day decline since 2022.
The drop followed remarks by Donald Trump, President of the United States, who said the conflict would be over “very soon.” It also followed an announcement by Saudi Aramco that it would increase shipments through its pipeline to the Red Sea port of Yanbu, enabling the company to restore about 70 percent of its usual export flows.
However, tensions remain high as Iran reported launching its “most intense and heaviest operation” since the war began, while Israel announced another wave of strikes targeting Tehran. Maritime authorities in the United Kingdom also reported that three vessels were struck by unidentified projectiles near the Strait of Hormuz.
