IEA Approves Largest-Ever Release From Global Oil Reserves Amid US-Iran Conflict

Yesterday, the International Energy Agency approved the largest-ever release from global oil reserves to quell rising prices for oil and gas amid the ongoing conflict in the Middle East.

The International Energy Agency, also known as the IEA, was founded in 1974 and consists of 32 advanced economies across North America, Europe, and Northeastern Asia. The group works to ensure that the world has access to reliable and affordable energy, and they maintain massive oil stockpiles of approximately 1.8 billion barrels in case of emergencies to facilitate a collective response to disasters and wars.

In this case, the US-Iran war has gone on for over a week, and it shows no signs of stopping. The Middle East is responsible for over 30% of the world's crude oil production, churning out over 31 million barrels per day. Additionally, the Strait of Hormuz handles around 20% of the world's oil supply, but the bottleneck has been effectively shut down by Iranian operations.

Iran asserted recently that they will not allow "even a liter of oil" through the Strait of Hormuz, and almost all shipping companies have completely shut down operations in the Persian Gulf. Major producers like Kuwait, Bahrain, and Qatar have halted oil production as they run out of storage space at local facilities, and Iran continues to press on– yesterday, Iranian officials addressed the US: "Get ready for oil to be $200 a barrel, because the oil price depends on regional security, which you have destabilized."

Gas prices in the United States have spiked considerably with the loss of oil supply from the Middle East– according to AAA, the national average gas price is approximately $3.60 per gallon, having been just $2.94 one month ago. Diesel prices have jumped even higher than gas, soaring from $3.67 in February to $4.86 per gallon.

To handle the situation, the IEA has sanctioned the release of over 400 million barrels of oil from global stockpiles, helping offset the shortage caused by the war. They did not confirm exactly when the release would take place, but when it occurs, it would be the largest-ever release from emergency stockpiles since the agency's founding.

Nevertheless, IEA Chief Fatih Birol confirmed that the release is simply a temporary solution, but shipping through the Strait of Hormuz must resume in order to fully re-stabilize global oil markets. His point was proved just hours later, as global crude prices began climbing from their lowest points in the war so far to surpass $90 per barrel once again.

Amid this crisis, several nations are emerging with minimal to no impacts– those that have invested in renewable energy. Renewable energy has been hailed as the energy of the future, and the Earth is slated to run out of oil by 2070. Countries that are already investing in renewables can reduce energy costs with an initial investment that also allows them to circumvent fluctuations in global oil markets and keep energy clean, reliable, and affordable for consumers.

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Image credit to AFP