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Major oil-consuming nations committed Wednesday to releasing 400 million barrels from strategic reserves in an effort that experts say cannot compensate for Iran’s closure of the Strait of Hormuz, even as the coordinated intervention represents the largest such drawdown ever attempted.
The International Energy Agency’s decision reflects the scale of disruption caused by the war, which has choked off roughly one-fifth of global oil and liquefied natural gas flows and sent prices swinging between $70 and nearly $120 per barrel in the space of days.
Crude traded just under $90 Wednesday morning after dropping below $87 the night before when news of the pending release leaked.
IEA Executive Director Fatih Birol called the action by member countries, which together control some 1.8 billion barrels of stockpiled crude, a “major” step to ease market strain. But he acknowledged the fundamental problem remains unsolved.
“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,” Birol said.
The waterway normally carries millions of barrels daily to markets across Asia, Europe and beyond. Iran’s decision to block it has forced Iraq and Kuwait to halt production at some fields because storage tanks have filled and tankers cannot leave. Oil that cannot be shipped has nowhere to go.
Saudi Arabia has redirected exports through a pipeline to the Red Sea. The United States waived sanctions on Russian crude to ease pressure. Now the IEA’s 32 member countries are tapping reserves built up over decades as a buffer against exactly this type of supply shock.
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It marks only the sixth time the group has coordinated such a release since forming in the 1970s oil crisis. The previous intervention came in 2022 when Russia invaded Ukraine.
Details on how much each country will contribute and when the oil will flow have not been announced. Physical limits constrain how quickly stockpiles can be drawn. Underground storage facilities can release only so much volume per day, meaning the 400 million barrels cannot flood markets immediately.
Angie Gildea, global oil and gas leader for KPMG, said the response offers marginal relief but cannot replace what the Strait closure has cut off. “There is simply no substitute for restoring access through the Strait of Hormuz,” she said. “The tools at our disposal, including strategic reserves, rerouting some exports and floating inventories, can provide some relief at the margins, but they are not structural solutions.”
The IEA was established as a counterpart to OPEC, the producer cartel that coordinates output among oil-exporting nations.
While OPEC represents suppliers, the IEA protects consumers. Membership requires countries to maintain reserves covering at least 90 days of imports and commit to reducing oil dependency.
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The group includes the United States, Canada, Australia, New Zealand, Turkey, Japan, South Korea and most European nations. More than a dozen others hold association status, including China, India, Thailand and Kenya. Together they account for 80 percent of global energy demand.
Some members, including the United States, now produce more oil than they consume and are not required under IEA rules to keep stockpiles. But the US maintains the world’s largest known reserve despite being both the top consumer and top producer globally.
The US Strategic Petroleum Reserve currently holds about 415 million barrels of a total capacity of 715 million. Efforts to refill it after the 2022 drawdown have been slowed by damage to the underground salt caverns where the oil is stored, officials have said.
Both the Biden and Trump administrations signaled plans to replenish reserves, though progress has lagged.
Oil markets have whipsawed as the conflict unfolded. Prices sat around $70 before fighting began, spiked to nearly $120 late Sunday as Iran launched retaliatory strikes across the Gulf, then fell back toward $90 as traders absorbed news of the IEA intervention and assessed whether the war might end soon.
President Donald Trump has said combat is “very complete, pretty much,” claiming Iran has lost its navy, air force and communications capabilities. But fighting continues and Iran has threatened further attacks if energy exports are permanently disrupted.
The volatility has rattled industries dependent on stable fuel costs. Airlines, shipping companies and manufacturers face unpredictable expenses that complicate planning and squeeze margins.
Whether the IEA release steadies markets depends partly on how long the Strait remains closed and whether alternative routes can absorb enough volume to prevent shortages.
The Saudi pipeline to the Red Sea has limited capacity compared to what normally flows through Hormuz. Redirecting tankers around Africa adds weeks to journey times and drives up costs.
Analysts note that even if reserves cushion the blow temporarily, sustained closure would eventually overwhelm any stockpile. The 400 million barrels represent less than five days of global oil consumption at current rates.
The IEA’s role has evolved since the 1970s, when oil embargoes and supply disruptions triggered economic crises across industrialized nations. The group now manages not just emergency releases but coordinates energy policy, promotes renewable development and tracks market trends.
Its membership has expanded to include countries that were once importers but have since developed domestic production.
That shift complicates the organization’s mission as some members compete with OPEC for market share while others remain vulnerable to supply shocks.
The current crisis tests whether mechanisms built for a different era can address disruptions shaped by modern geopolitics and technology.
Drones, missiles and cyberattacks have replaced the embargo tools of the 1970s, but the fundamental challenge—keeping energy flowing to economies that depend on it—remains unchanged.
