400-M barrels to be freed as oil hits $100

The International Energy Agency (IEA) on Wednesday said its member countries will unlock 400 million barrels of oil from their reserves, the biggest such release ever, to ease the impact of the Middle East conflict as oil soared above $100 per barrel.

Iran’s fresh attempts to hit supplies in the Middle East and threats to bring down the global economy overshadowed the IEA’s move.

The IEA measure failed to overcome fears of the choking of energy supplies, with the Strait of Hormuz, through which a fifth of global crude passes, effectively shut down.

IEA member countries hold over 1.2-billion barrels of public emergency oil stocks, with a further 600 million barrels of industry stocks held under government mandates.

The coordinated fuel release is the sixth in the organization’s history, which was created to synchronize responses to major supply disruptions following the 1973 oil crisis.

Locally, fuel retailers are in talks to replenish supply as the fuel reserves, covering both existing stocks and shipments already on the way, are estimated to last for only 50 days.

Energy Secretary Sharon S. Garin said the current inventory is sufficient for now, but the government is ensuring that oil companies continue to place orders to avoid supply disruptions.

Authorities are awaiting reports from fuel firms on the volume of new orders they have placed.

“We are also making sure that fuel companies are placing orders. We are waiting for their report on how many new orders have already been made,” Garin said.

She said the government is also seeking additional suppliers to ensure supply once the current 50-day inventory is depleted.

“We are also looking for other suppliers to make sure we have enough supply after these 50 days,” she said.

Hormuz strait is key

“IEA countries have unanimously decided to launch the largest-ever release of emergency oil stocks in our agency’s history. IEA countries will be making 400 million barrels of oil available,” IEA executive director Fatih Birol told reporters.

“This is a major action aiming to alleviate the immediate impacts of the disruption in markets,” he added.

“But 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,” he said.

The IEA-coordinated release exceeded the 182 million barrels of oil that member countries of the Paris-based global energy body released in 2022 when Russia invaded Ukraine.

The 32-member IEA said the emergency stocks will be made available “over a timeframe that is appropriate to the national circumstances of each member country and will be supplemented by additional emergency measures by some countries.”

G7, Gulf countries coordinate

The IEA announcement came as leaders of the Group of Seven (G7) advanced economies discussed the economic fallout from the US-Israeli war with Iran, now into its second week, at a video conference meeting chaired by French President Emmanuel Macron.

Macron, whose country holds the rotating presidency of the G7 advanced economies, urged US President Donald Trump and other G7 leaders to coordinate to open the strait “as soon as possible.”

At the same time, he said the Strait being choked “in no way” justifies lifting the sanctions imposed on Russia over the invasion of Ukraine.

“The consensus was that we should not change our position on Russia and should maintain our efforts on Ukraine,” Macron said.

Macron said the G7 would coordinate moves with Gulf countries “in the coming days.”

He has said France and its allies are preparing a “defensive” mission to reopen the strategically vital strait.

Earlier Wednesday, Japan — whose strategic oil reserves are among the world’s largest — and Germany said they would tap into their oil reserves.

Prime Minister Sanae Takaichi said Japan would release reserves as early as Monday. Germany’s Economy and Energy Minister Katherina Reiche said her country planned to do the same, without specifying a date. Reiche said a total of 2.4 million tons would be released.

US Interior Secretary Doug Burgum said the transit problem was “temporary.”

“What we have here is not a shortage of energy in the world. We’ve got a transit problem,” he said.

Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, said 400 million barrels would still be a “meager” amount compared with the roughly 45 million barrels that IEA countries consume every day. “It would therefore be a temporary fix,” she said.

“The Middle East is now pumping less oil — around six percent less — in reaction to the Iran war.”

DoE issues guidelines

Meanwhile, in an advisory, the Department of Energy (DoE) said the sale of petroleum products in fuel-grade drums or containers is permitted only for legitimate operational use.

The DoE said such arrangements apply to sectors that depend on this mode of delivery, including fishing vessels, sea transport services, hospitals using generator sets, local government units, agricultural machinery operators, telecommunications facilities and port transport units.

“Purchases must be proportionate to a customer’s usual consumption and actual operational needs,” the DoE said, noting that transactions that significantly exceed normal buying patterns may be subject to verification to ensure compliance with anti-hoarding regulations.

To help ease demand, the agency also ordered nationwide fuel audits and spot checks in government facilities to enforce compliance with efficiency standards and fully implement the Government Energy Management Program.

Under Memorandum Circular 114, all national and local government agencies are required to cut fuel and electricity consumption by 10 to 20 percent by year’s end.

“At a time when energy must be managed with greater discipline and responsibility, government institutions must set the standard by showing that conservation can be practiced every day without compromising service to the public,” Garin said.