Uche Cecil Izuora
The International Energy Agency (IEA) has allayed fears of unprecedented oil price hike stressing that it sees no need yet to release emergency oil stockpiles amid the Middle East crisis, as global oil supplies are plentiful and the impact appears likely to be temporary.
“All options are on the table, but there are no plans for a collective action at this stage,” IEA Executive Director Fatih Birol said at the weekend. “There is plenty of oil in the market,” even amounting to a “huge surplus.”
The conflict in the Middle East sparked with U.S. and Israeli strikes on Iran on Feb. 28 has roiled energy markets and driven up prices for crude, natural gas and oil products, threatening to unleash a wave of global inflation.
Brent futures surged above $89 a barrel in London on Friday, the highest in almost two years as shipping through the Persian Gulf’s vital Strait of Hormuz remained essentially halted, while U.S. retail gasoline prices reached the strongest level since 2024. Still, prices are considerably below the levels reached after Russia’s 2022 invasion of Ukraine.
Birol acknowledged that some IEA member nations may pursue individual policies dealing with the upheaval. The Japanese government is considering releasing oil reserves in response to the situation in Iran, Kyodo reported, citing unidentified government people familiar with the matter.
And there are other levers that consuming nations call pull, besides drawing on their own reserve buffers.
The U.S. has cleared the way for India to temporarily increase its purchases of Russian oil, reversing months of pressure on one of the world’s largest crude importers, with a one-month license issued late on Thursday.
In recent weeks, a surplus of oil from Russia and Iran has accumulated on tankers at sea as tighter U.S. sanctions deter the countries’ main customers in Asia. Refineries could use this to quickly ramp up purchases and stabilize operations.
Trump said on Thursday that there would be further action to reduce pressure on oil prices, having previously pledged naval escorts and insurance guarantees for tankers.
The Paris-based IEA oversees emergency oil stocks for developed nations such as the U.S., Germany and Japan, and has deployed these during crises such as Russia’s invasion of Ukraine and the Libyan uprising of 2011. Throughout the current turmoil it has publicly and internally reiterated its readiness to act if necessary.
“Everybody’s trying to find a solution,” Birol said. But for the time being, “we are facing a temporary disruption, a logistical disruption,” rather than any shortage of oil.
Birol’s comments are consistent with views expressed privately by top IEA nations.
The European Union told member states that there is currently no justification to release strategic oil stocks, according to people familiar with the matter.
However the G7 finance ministers said they will discuss a possible joint release of petroleum from reserves co-ordinated by the IEA, in an emergency meeting on Monday aimed at tackling the surge in oil prices following the conflict in the Gulf.
The ministers and Fatih Birol, IEA executive director, will discuss the impact of the Iran war, according to people familiar with the situation, including a senior G7 official. Three G7 countries, including the US, have so far expressed support for the idea, according to the people familiar with the talks.
The 32 members of the IEA hold strategic reserves as part of a collective emergency system designed for oil price crises.
The meeting comes as US President Donald Trump faces pressure to halt the steep rise in the crude oil price since the start of the war. The average US petrol price rose to $3.45 a gallon by Sunday, from $2.98 a gallon a week ago, and is destined to go higher unless Trump can reverse the trend.
The increase in oil prices over the past week has triggered global fallout, threatening an inflationary surge that could do lasting damage to economic growth across the world.
China, India, South Korea, Japan, Germany, Italy and Spain are among the biggest importers of crude, leaving them heavily exposed to price shocks.
Brent crude, the international benchmark, leapt 24 per cent in Asia trading on Monday to $116.71 a barrel but later fell back to be up almost 19 per cent at $110.85 after news of the G7 meeting. West Texas Intermediate, the US marker, rose 28 per cent to $116.45 before falling back to around $108, up almost 19 per cent.
The emergency petroleum stockpiles were set up as part of the creation of the IEA in 1974 following the Arab oil embargo, which sent crude prices soaring and triggered major fuel shortages across the western world.
The reserves are designed to allow big oil-consuming countries to respond to significant energy shocks. There have been five collective releases by IEA member states since the organisation’s creation.
The last two were in 2022 to counter the oil price surge after Russia’s invasion of Ukraine.