Drop in the Bucket: Strategic Reserves Release Struggles to Ease Crude Oil Price Shock

On March 11, the International Energy Agency (IEA) announced the release of approximately 400 million barrels of strategic petroleum reserves (SPR) to address the surge in oil prices triggered by the escalation of the US-Iran conflict. This is the agency’s largest release since its establishment 52 years ago, far exceeding the 183 million barrels released during the Russia-Ukraine conflict.

According to IEA data, the public strategic petroleum reserves of the 38 member countries of the Organization for Economic Co-operation and Development (OECD) exceed 1.2 billion barrels, with an additional approximately 600 million barrels of commercial stocks under government oversight. In this joint release, the United States will bear the largest share, releasing 172 million barrels of strategic petroleum reserves. Japan plans to release about 80 million barrels, while South Korea, Germany, France, and the United Kingdom plan to release 22.5 million, 19.5 million, 14.5 million, and 13.5 million barrels respectively.

Since the IEA did not disclose key implementation details—including the release pace, duration, and the ratio of crude oil to refined products—it only stated that the oil “will be released into the market within a timeframe appropriate to each member country’s circumstances, with some countries taking additional emergency measures to supplement.” After the announcement, the market was not convinced by this record-breaking release; Brent crude prices briefly fell before quickly rebounding. Subsequently, news of two oil tankers being attacked in Iraqi waters caused Brent crude to surge by 9.4%, once again surpassing the $100 per barrel mark.

This kind of market rally following a release indicates that the market does not see this as a fundamental solution. In other words, the focus is not on inventory levels but on the actual supply flow entering the market daily. The biggest risk to the crude oil market is the potential blockade of the Strait of Hormuz, which could disrupt about 20% of global energy supplies. Iran has also accelerated the deployment of sea mines, making maritime navigation more difficult. Currently, disruptions in shipping through the Strait of Hormuz are estimated to cause a daily loss of about 18 million barrels of supply, nearly matching Saudi Arabia’s oil production.

The IEA recommends an initial release of 100 million barrels, approximately 3.3 million barrels per day, consistent with the previously announced 120-day plan by U.S. Energy Secretary Jennifer Granholm. However, this only addresses about one-fifth of the 18 million barrels per day supply gap, offering limited short-term relief for supply-demand imbalances.

Therefore, this action is primarily viewed as a policy signal to stabilize expectations rather than a tool to fundamentally alter the market’s supply and demand structure. Its main purpose is to demonstrate a collective intervention by major consuming countries to lower risk premiums and to buy time for maritime insurance, route adjustments, naval protection, and diplomatic pressure.