A widening war in Iran has halted oil tankers, made targets of refineries and spooked investors worried about the cascading impact of spiking energy prices.
In response, the International Energy Agency agreed on Wednesday to release the largest volume of emergency oil reserves in its history, with the Paris-based organization pledging to make 400 million barrels of oil available from its member nations’ stockpiles. The announcement marked a shift in momentum in government response to the war upending the flow of oil, with other global leaders previously indicating reluctance to tap into stockpiles.
Here is a look at the energy supplies that countries hold and when they tap them:
Many countries have reserves of oil
Since war erupted in the Middle East on Feb. 28 with the U.S. and Israel’s joint attacks on Iran, the flow of oil tankers through the Strait of Hormuz has all but stopped, cutting off a vital passageway where roughly one-fifth of the world’s oil sails through on a typical day. Major producers in the region like Iraq, Kuwait and the United Arab Emirates have also cut production because they are running out of storage space. And Iran, Israel and the U.S. have all struck oil and gas facilities, worsening supply concerns.
That has sent prices soaring with dramatic swings almost every day. On Monday, Brent crude oil — the international standard — surged to as high as nearly $120 a barrel, before falling to under $90 after President Donald Trump suggested the war could be near an end. But attacks have continued to escalate since, pushing prices back to about $100 a barrel.
Countries around the world hold vast quantities of oil that they can use in the event of a crisis.
Because oil is a global commodity and flooding the market with a sudden stream of new supply has international implications, countries often talk to one another before tapping reserves. That includes coordinating with the IEA, an organization created in the aftermath of the 1973 oil crisis. It has 32 members — including Germany, Austria and Japan, all of whom confirmed Wednesday that they would be tapping parts of their reserves. The U.S., Mexico, Australia and other major countries are also part of the IEA.
IEA members currently hold over 1.2 billion barrels of public emergency oil stocks, with a further 600 million barrels of industry stocks held under government obligation. The largest-ever previous collective release of emergency stocks by IEA member countries was 182.7 million barrels following Russia’s full-scale invasion of Ukraine in 2022.
Each of the IEA member countries promises to have a reserve at least equivalent to what they import in a 90-day period. The U.S. exports more than it imports, maintaining its own reserve — known as the Strategic Petroleum Reserve — despite there being no requirement. But for other countries, tapping their reserves means that they will eventually need to replenish what was removed.
“Because of that, countries tend to keep reserves for a last-resort scenario, should the disruption be prolonged,” said Maksim Sonin, an energy executive who works with Stanford University’s Hydrogen Initiative.
Timing a release is tricky
Opting to use oil reserves is never a simple calculation, particularly when linked to a war with constantly shifting parameters and no clear timeline.
When nations tap into strategic reserves in situations like the war in Iran, the oil is sold into the global marketplace, theoretically increasing supply and thus, lowering prices.
“The key question on drawing down these reserves remains one of, ‘How long will this conflict last?’” said Tom Seng, an energy finance professor at Texas Christian University. “And, more importantly, ‘How long will the Strait of Hormuz remain blocked?’”
Oil reserves have been tapped when the market has faced major disruption in the past, including wars in Iraq, Libya and, most recently, in Ukraine.
Kenneth Medlock, senior director of the Center for Energy Studies at Rice University, said it’s not a matter of whether the current conflict is serious enough to merit intervention, but whether the precise moment has arrived.
“The price is up but it could get worse,” Medlock said. “What happens if this drags on for two, three months? Then you run into a situation where you lose your buffer.”
Shift in discussions and the impact on prices
Before Wednesday, countries were reticent to tap reserves. Over the weekend, Trump downplayed the idea of turning to the U.S. reserve, maintaining that supplies were ample and prices would soon fall.
But that’s changed. On Wednesday, the president told WKRC Local 12 in Cincinnati his administration would tap into the SPR “a little bit” to bring down prices. Secretary of Energy Chris Wright later confirmed the U.S. would release 172 million barrels as part of the IEA’s effort.
Representatives from the Group of Seven major industrialized powers previously held off on using strategic reserves earlier this week, too. But G7 nations also joined the IEA effort. French President Emmanuel Macron praised Wednesday’s decision — and noted the amount pledged by the G7 nations alone comprises 70% of the total, including 14.5 million barrels from France.
Talk of tapping into national reserves helped ease energy markets earlier this week. But crude prices actually ticked up after the withdrawal was confirmed Wednesday, with Brent rising 4.8% to settle at $91.98. That is far higher than the roughly $70 it was selling for before the war started less than two weeks ago.
Analysts maintain the IEA’s release of 400 million barrels is a short-term bridge, making up for just a few weeks of lost supply.
—Matt Sedensky and Wyatte Grantham-Philips, Associated Press