Western nations have greenlit the largest release of oil reserves in history.
What happened: As the war in Iran continues to disrupt oil supply chains, all 32 members of the International Energy Agency (IEA) have agreed to release up to 400 million barrels of oil from their respective government reserves in a bid to curb soaring prices.
The release is more than double the IEA's previous largest, which came in 2022 after Russia launched its invasion of Ukraine.
The U.S. and Japan will be the largest contributors. An EU diplomat told Reuters that pressure to tap the reserves came mostly from the U.S. government.
Why it’s happening: Since the U.S. and Israel attacked Iran less than two weeks ago, the price of crude has jumped as much as 40%, largely due to the closure of the Strait of Hormuz, through which about one-fifth of the world’s oil supply moves. That logjam — and the lack of clarity on when it will be cleared — has put major pressure on global energy supplies.
Since barrels aren’t being moved, hubs like the UAE and Saudi Arabia — with dwindling space to store the black gold — have been forced to cut production.
Why it matters: This isn’t just the biggest release of oil reserves in the IEA’s history — it's among the largest coordinated global economic responses since the 2008 financial crisis. The scale of the response speaks to the uncertainty around how long the war in Iran will last.
What’s next: Releasing the reserves is more of a stopgap solution to ease pain at the gas pump, and as investment firm Macquarie put it: “Crude oil will continue to trade like a 'meme stock' until the solution is peace."—LA