Can the IEA's Emergency Oil & Gas Supplies Combat Shortages?

The International Energy Agency (IEA) has mobilised an emergency release of 400 million barrels of oil from its member countries' strategic reserves.

This is the largest such action in the organisation's 52-year history, which speaks to the scale of disruption that the unfolding war in the Middle East is engendering.

The decision, taken unanimously by IEA member countries , comes in response to what the agency has described as the largest supply disruption in the history of the global oil market.

Since the conflict began on 28 February, the flow of oil through the Strait of Hormuz – the narrow waterway through which nearly 20 million barrels per day ordinarily pass – has been reduced to little more than a trickle, with insurers refusing to cover shipping in the region.

The consequences of this trade impasse have been swift and severe.

The scale of the disruption

Gulf producers have curtailed total oil output by at least 10 million barrels a day, with the IEA estimating that crude production alone is being cut by at least eight million, alongside a further two million of condensates and LNG.

So far, major reductions have been recorded in Iraq, Qatar, Kuwait, the UAE and Saudi Arabia.

The damage extends beyond upstream production too.

More than three million barrels per day of refining capacity in the region has already shut due to attacks or safety concerns, and a further four million is considered at risk as product storage tanks fill up with nowhere to send exports.

In 2025, producers in the Gulf exported roughly 3.3 million barrels of refined oil a day, as well as 1.5 million barrels per day of liquefied petroleum gas (LPG).

Since the conflict began, the flow of these fuels has now been almost entirely severed.

Diesel and jet fuel markets are considered particularly exposed, given limited flexibility in other regions to increase output at short notice.

Markets in turmoil

Oil prices have gyrated wildly in the weeks since hostilities began.

Brent futures briefly traded within a whisker of US$120 per barrel before easing back.

At the time of the IEA's March report, the benchmark stood at around US$92 – still US$20 above its pre-conflict level.

The price surge, combined with the suspension of flights across major Middle Eastern airports and collapsing LPG supplies, has begun to erode demand more broadly.

The IEA has cut its forecast for global oil demand growth in 2026 by 210,000 barrels per day to 640,000 barrels per day, with the sharpest reductions concentrated in March and April.

The details of the IEA's emergency reserves

The release of the IEA's reserves is already underway, with member countries in Asia-Oceania moving immediately and those in the Americas and Europe beginning to make stocks available from the end of March.

Of the total of 400 million barrels, 271.7 million will come from government stocks while a further 116.6 million barrels will come from obligated industry stocks.

On top of that, 23.6 million barrels will be released through other measures – predominantly from the Americas.

This marks only the sixth time in the IEA's history that member countries have taken emergency collective action, following previous interventions in 1991, 2005, 2011 and twice in 2022.

A buffer, not a solution

For all its scale, the IEA has been candid about the limitations of the intervention.

"This emergency collective action, by far the largest ever, provides a significant and welcome buffer," the agency says.

"But the most important factor in ensuring a return to stable flows is the resumption of regular transit of shipping through the Strait of Hormuz."

Global observed oil stocks stood at 8,210 million barrels in January – their highest level since February 2021 – providing some headroom, but analysts warn that without restored shipping flows, even the largest reserve release in history amounts to little more than a temporary patch.

"Adequate insurance mechanisms and physical protection for shipping are key to the resumption of flows," the IEA noted, pointing to the structural problem that no amount of stored oil can resolve while tankers remain unable or unwilling to transit the world's most critical oil chokepoint.