The International Energy Agency has proposed the largest ever release of oil reserves, according to the Wall Street Journal, as governments seek to contain a spike in energy prices driven by the Middle East war.
The proposed release, circulated during an emergency meeting of energy officials on Tuesday, would exceed the 182 million barrels that member countries released in two tranches in 2022, after Russia invaded Ukraine, the newspaper reported, citing officials familiar with the matter. That would make it the single largest release to date.
Global benchmark Brent gave up earlier gains of almost 4 per cent following the report, before trading around $88 a barrel.
A widening war and the near total closure of the Strait of Hormuz have led to cuts from Persian Gulf producers that have so far shaved about 6 per cent of global oil output, sending prices of everything from jet fuel and cooking gas soaring across the world.
Millions of barrels of crude and fuels remain stuck on tankers that can’t cross the narrow strait, where ships have been attacked. The jamming of signals has made it even tougher and unsafe for vessels in the area.
The Group of Seven nations had earlier this week asked the IEA to prepare scenarios for the release of emergency oil stockpiles. Countries want to be ready to deploy oil reserves if needed, and have tasked the IEA with studying the volumes that could be released, French Finance Minister Roland Lescure told reporters on Tuesday.
IEA officials in Paris did not immediately respond to a request for comment outside working hours.
The proposal could be delayed if a single country objects, however. Countries are expected to decide on the proposal on Wednesday, the Journal said.
The 32 countries that belong to the IEA collectively hold at least 1.2 billion barrels of oil in emergency public stores, according to the group, which oversees coordinated stockpile releases.
The Paris-based agency has helped implement five such interventions: in the buildup to the first Gulf War, after hurricanes Rita and Katrina in 2005, following the outbreak of civil war in Libya in 2011 and twice in 2022, in response to disruptions connected to the war in Ukraine.
Previous releases from strategic reserves have not always had the desired impact. The two releases in 2022 at first caused oil prices to rise as the market interpreted them as a sign the crisis was worse they thought, before eventually helping to bring prices down.
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