Buying Time Till Iran Surrenders

Tomorrow, the 32 countries that are members of the International Energy Agency (IEA) will vote on an IEA proposal to tap their strategic petroleum reserves to bring down oil prices, which have been boosted by the latest war in the Middle East. The release would exceed the oil that IEA countries released after Russia invaded Ukraine in 2022. The IEA members hold 1.8 billion barrels in reserves, which include 600 million barrels in commercial inventories. That would offset about 124 days' supply trapped on the wrong side of the Strait of Hormuz.

This news came out this evening and had no impact on Brent and WTI crude oil prices because it was expected after the G7 Finance Ministers and Central Bank Governors held an emergency virtual meeting yesterday. They issued a joint communiqué stating they "stand ready to take necessary measures," specifically mentioning a coordinated release of strategic petroleum reserves. Reports suggest the group is weighing a release of 300 million to 400 million barrels—a move that would dwarf the 240-million-barrel release following the 2022 invasion of Ukraine.