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Informist, Thursday, Mar. 12, 2026

 

By Ashutosh Pati

 

MUMBAI – The International Energy Agency's decision to release emergency oil reserves of member nations has failed to halt the surge in crude oil prices. Brent crude again rose above $100 per barrel Thursday, the second time this week. Market participants are worried about the time these barrels will take to reach the market and if it will be enough to make up for the loss of supply.

 

Even though the IEA's decision did not result in a correction in prices, it definitely put a cap on the rise and will cushion near-term disruptions, analysts said. However, the only way prices could fall back to levels seen before the US-Iran war is the resumption of oil shipments through the Strait of Hormuz. A prolonged disruption will lead to higher prices.

 

The military conflict in West Asia has entered its 13th day, with the Strait of Hormuz still being shut. Iranian military officials said the world should be ready for oil at $200 a barrel as it attacked three ships, including two in Iraq's territorial waters, trying to pass through the Strait of Hormuz.

 

The 32 member nations of the IEA Wednesday unanimously agreed to release 400 million barrels of crude oil from their emergency reserves--the largest stock of oil reserves to be offloaded on record--to offset the disruption in supply caused by the effective closure of the Strait of Hormuz. IEA members hold emergency stocks of over 1.2 billion barrels, with a further 600 million barrels of industry stocks held under the government obligation. This is the sixth time in the agency's history that it has released emergency stock, the last one being in 2022.

 

"The pace and duration of the release will be key to what impact the releases have in the short term," analysts at ANZ Research said in a report. "A slow release will do little to offset the millions of barrels that are being lost due to the effective closure of the Strait of Hormuz," they said.

 

The IEA won't be able to release the oil reserves immediately, Anindya Banerjee, head of commodity and currency research at Kotak Securities, said. There are operational measures that have to be taken and the whole process will take time, he said.

 

The US has also decided to release 172 million barrels of oil from the strategic petroleum reserves, starting next week. This will take around 120 days to deliver based on planned discharge rates, US Secretary of Energy Chris Wright said in a statement. This translates to a release of around 1.4 million barrels per day. "If you assume a similar timeline for other countries, that works out to 3.3m b/d- (3.3 million barrels per day) far short of the supply losses we are seeing from the Persian Gulf," Warren Patterson, head of commodities strategy at ING Economics, said in a report.

 

The conflict in West Asia has severely disrupted flows of oil, gas, and other commodities through the Strait of Hormuz, a key transit route that normally carries about 15 million barrels per day of crude oil and another 5 million barrels per day of oil products, or roughly 25% of global seaborne oil trade.

 

"Even a fast release (of oil reserves) may fall well short of requirements," ANZ analysts said. The maximum drawdown capability of the US strategic petroleum reserves is 4.4 million barrels per day, and it takes the oil 13 days to reach the open market after a presidential decision. "IEA coordinated releases have never exceeded 2mb/d (million barrels per day)," they said.

 

When the IEA released its reserves in 2022, the largest single-week drawdown was 8.4 million barrels, or 1.2 million barrels per day, according to ANZ Research. "We estimate that at the theoretical maximum combined drawdown rate across all G7 nations, we would likely see a flow rate of only 2mb/d sustained over months," the ANZ analysts said.

 

"Even after this record release news, the market is not ready to gulp it and stabilise as the war has escalated and there seems no signal for the de-escalation. The medium to long term repercussions are serious on the countries dependent on oil imports," said Jigar Trivedi, senior research analyst at Reliance Securities.

 

While the release of emergency reserves by the IEA will not be enough to make up for the loss of supply from West Asia, it will provide near-term relief and keep oil prices from rising significantly again in the short term. Kotak Securities' Banerjee said the release of emergency oil will cap the rise in prices. "It won't let (Brent) prices go beyond $105 per barrel."

 

ANZ analysts said the emergency release of stockpile would cover only 14% of the total shortfall. "Even so, inventories are a bridge, not a substitute for lost production. They can smooth flow mismatches and cap extreme price spikes, but they cannot offset sustained supply attrition without accelerating the drawdown of already-tight commercial stocks," ANZ analysts said.

 

However, analysts believe only the reopening of the Strait of Hormuz can prevent further rise in prices. The longer the strait is shut, prices are bound to rise, they said. "...the only way to see oil prices trade lower on a sustained basis is by getting oil flowing through the Strait of Hormuz. Failing to do so means that the market highs are still ahead of us," ING's Patterson said.

 

Banerjee said immediate resistance for Brent crude is $105 per barrel and a move above this could lead to prices reaching all-time highs. The immediate support level is at $85 per barrel. For West Texas Intermediate crude, the major resistance is $98 per barrel and support is at $80 per barrel.  End

 

US$1 = INR 92.19

 

Edited by Ashish Shirke

 

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