The International Energy Agency (IEA) has put forward a proposal for its largest-ever release of oil reserves to tackle increasing crude prices amid tensions between the US, Israel and Iran, according to a report in the Wall Street Journal.
The proposed release would surpass the 182 million barrels (mbbl) of oil released by IEA member nations in 2022 during Russia’s attack on Ukraine.
IEA members convened for an urgent meeting to consider the proposal, with a decision anticipated on Wednesday.
However, objections from even one member country could delay the initiative.
IEA member nations hold more than 1.2 billion barrels (bbbl) of public emergency oil reserves, plus an additional 600mbbl of industry stocks mandated by governments.
Meanwhile, G7 energy ministers refrained from endorsing a release of strategic oil reserves and instead requested an assessment from the IEA, reported Reuters.
A G7 source was quoted by the news agency as saying: “Although no country currently faces a physical shortage of crude, prices are rising sharply, and leaving the situation unattended is not an option.”
The source added that G7 countries generally support coordinated action by the IEA but noted that further discussions are needed regarding volume, country allocations and timing before a release can begin.
The IEA’s secretariat is expected to suggest scenarios based on market impacts and may engage with non-members like China and India.
By 04:51 GMT on Wednesday, oil prices continued to decline as Brent futures decreased by $0.88 to $86.92 per barrel (bbl), while US West Texas Intermediate fell by $0.35 to $83.1/bbl, Reuters reported.
These market reactions follow the sharpest percentage declines in both contracts since 2022, driven by concerns that the conflict could disrupt supply.
G7 officials have convened online to deliberate on possible releases from emergency oil reserves to alleviate market effects.
French President Emmanuel Macron is scheduled to hold a video conference with fellow G7 leaders on Wednesday to address energy issues stemming from tensions in the Middle East.
Meanwhile, Abu Dhabi state oil company ADNOC has shut down its Ruwais refinery in response to a fire caused by a drone strike at one of its units. This marks another disruption in energy infrastructure in recent days due to the ongoing conflict.
Amidst this global volatility, Brazil remains a “relative winner” in a climate of higher oil prices, according to a GlobalData TS Lombard report authored by Elizabeth Johnson and Wilson Ferrarezi.
Since 2024, crude oil has become the country’s top export, and the current price surge is expected to significantly boost export revenues and fiscal earnings for state-owned Petrobras.
