IEA Expects Quick Release of Asia Pacific Oil Stocks

The International Energy Agency (IEA) said Sunday oil reserves held by members in Asia and Oceania could be released immediately as part of the group’s pledge to make 400 million barrels available to the global market.

Last Wednesday the IEA said its 32 member states unanimously agreed to draw from their emergency stocks to “address disruptions in oil markets stemming from the war in the Middle East”. The organization represents over 1.2 billion barrels in government reserves and a further 600 million barrels in industry-held volumes stored under government obligation, the IEA said in an online statement Wednesday. The Paris-based body noted this is its sixth and biggest collective release in its half a century of existence.

In an update on its website on Sunday the IEA said, “Individual implementation plans have been submitted to the IEA by member countries. These plans indicate that stocks will be made available by IEA member countries in Asia Oceania immediately while stocks from IEA member countries in the Americas and Europe will be made available starting from the end of March”.

Committed stocks from Asia and Oceania stood at 108.6 million barrels as of Sunday. That consisted of 66.8 million government-held barrels and 41.8 million industry-held barrels. Crude comprised 60 percent and oil products 40 percent.

U.S. Release

The Americas have so far pledged 172.2 million barrels of crude, according to the breakdown shown in the update. The IEA did not provide a by-country breakdown.

Earlier the U.S. pledged 172 million barrels of petroleum. A statement from the Department of Energy (DOE) last Wednesday confirming the contribution, which would be drawn from the Strategic Petroleum Reserve (SPR), said delivery would take about 120 days.

On Friday DOE made a request for proposal amounting to 86 million barrels to replenish part of the war drawdown. DOE said in a statement Friday that to date, the SPR had around 415 million barrels.

“Early deliveries are expected to begin moving to market by the end of next week”, Friday’s statement said.

EU Supply

The IEA’s European members have so far pledged just nearly 32.7 million barrels, though an additional 74.8 million barrels would come from the industry, according to IEA’s update Sunday.

Sixty-eight percent of the combined volume in Europe consists of oil products, with crude comprising 32 percent.

On Wednesday the European Union maintained it did not “observe any security of supply risks at the moment”. The European Commission issued this statement after another round of meetings by the Oil Coordination Group and Gas Coordination Group over the Middle East conflict.

“Oil stocks remain at a high level, gas storage filling levels in the EU remain stable”, the Commission said.

EU gas storage facilities were 28.97 percent full, or had 330.98 terawatt hours of gas, as of Saturday, according to the latest update on the online monitoring dashboard of the European Network of Transmission System Operators for Gas.

“EU countries agreed that the regulatory framework provides for sufficient flexibility and gas storages should not be refilled at all costs”, the Commission added.

“The Oil Coordination Group welcomed the voluntary nature and timing flexibility of the International Energy Agency’s 400-million-barrel release announced yesterday while calling for an assessment of its medium-term impact on supply security.

“The Commission will continue to monitor the situation and keep regular communication with EU countries and market participants. In case of a prolonged closure of the strait of Hormuz or further disruptions, the EU security of oil and gas supply will be reassessed”.

Urgency for Hormuz Reopening

The IEA highlighted in Sunday’s update that “the most important factor in ensuring a return to stable flows is the resumption of regular transit of shipping through the Strait of Hormuz”.

“Adequate insurance mechanisms and physical protection for shipping are key to the resumption of flows”, it said.

In Wednesday’s announcement of the collective release by members, the IEA warned that the export volumes of crude and refined products had fallen to less than 10 percent of pre-conflict levels following the disruption of flows through the passage between the Persian Gulf and the Gulf of Oman.

“Options for oil flows to bypass the Strait of Hormuz are limited”, the IEA said, noting an average of 20 million barrels per day – about 25 percent of the world’s seaborne oil trade – transited through the strait last year.

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