International Energy Agency proposed to deeply tap into oil reserves
The International Energy Agency (IEA) has proposed to release about 400 million barrels of oil from the reserves of Organization for Economic Co-operation and Development (OECD) countries. This measure is proposed due to a sharp rise in energy prices, caused by the war in the Middle East and the suspension of oil supplies through the Strait of Hormuz. If the decision is approved, it will be the largest use of oil reserves in the organization's history, Bloomberg writes .
Photo: Omar Marques/SOPA Images/LightRocket via Getty Images
German Minister of Economy and Energy, Katharina Reiche, announced that her country will begin using part of its reserves after the official approval of the proposal. The issue is also planned to be discussed at the meeting of G7 leaders. Japan has already stated that it will begin releasing oil from its strategic reserves starting March 16.
In total, the 32 member countries of the agency hold more than 1.2 billion barrels of oil for emergencies. The largest storage is the US Strategic Petroleum Reserve, which holds about 415 million barrels. Additionally, approximately 600 million barrels of industrial stocks are held under government obligations. According to the rules, countries must have enough reserves to last at least 90 days.
At the same time, some analysts and traders doubt that these reserves will be able to quickly compensate for a possible market deficit. JPMorgan experts note that releasing such a volume would provide additional supplies of approximately 1.2 million barrels of oil per day, which might be insufficient to fully cover potential supply losses. The United States, according to their estimates, could provide the largest portion of this oil.
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