The International Energy Agency could release additional volumes of crude from storage should the need arise, the head of the agency, Fatih Birol, said today.
“If it is necessary, of course, we will do it. We look at the conditions, we will analyse, assess the markets and discuss with our member countries,” Birol said in Australia at the start of what Reuters described as “a world tour”.
The IEA earlier this month said it would release 400 million barrels of crude from OECD reserves to cushion the blow to oil markets caused by the disruption of tanker traffic in the Middle East. Birol pointed out that the additional release will not be triggered by any particular oil price level.
The coordinated oil release action, announced on March 11th by the IEA, represents the largest emergency oil release ever organized by the group and only the sixth such intervention since the IEA was created following the 1970s oil shocks. The move comes as tanker traffic through the Strait of Hormuz, which serves as the critical chokepoint for roughly 20% of global oil and LNG trade, has slowed sharply amid escalating military activity in the Gulf.
Birol has described the current oil supply crisis as worse than both the Arab oil embargo from the 1970s and the effects of the war in Ukraine put together. He also admitted that “A stock release will help to comfort the markets, but this is not the solution. It will only help to reduce the pain in the economy.”
The war in the Middle East has already prompted oil producers in the region to start slashing production as they run out of storage space. While some oil is leaving the region, it seems to be mostly Iranian oil. The situation has also worsened as a result of attacks from Iran on energy infrastructure in neighboring countries in response to Israeli and U.S. attacks on its own infrastructure, including the giant South Pars gas field.
By Irina Slav for Oilprice.com
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