Oil prices have swung sharply this week as the near-closure of the Strait of Hormuz continues to send shockwaves through global energy markets, with the International Energy Agency now weighing an unprecedented drawdown of strategic reserves to stabilise supply.
Brent Crude retreated to around $88 per barrel on Wednesday, while West Texas Intermediate hovered near $83, after reports emerged that the Paris-based IEA is proposing a reserve release that would surpass the 182 million barrels deployed during the Russia-Ukraine war in 2022 — the largest coordinated intervention in the agency's history.
The move comes as Iran's threats against tankers have effectively brought energy shipments through the Strait of Hormuz — the narrow waterway carrying roughly one-fifth of global daily oil supply — to a near standstill. This is precisely the scenario the IEA was created to address, following the 1974 Arab oil embargo that prompted Western nations to establish coordinated petroleum reserves as a safeguard against geopolitical supply shocks.
A decision among IEA member countries was expected today, though a single dissenting nation could derail the plan. Adding diplomatic weight, French President Emmanuel Macron convened a G7 leaders' call at 2:00 PM GMT to address the energy crisis — coming after G7 energy ministers failed to reach consensus on Tuesday and deferred the matter to the IEA.
Markets have been volatile throughout the week. Oil briefly surged to near four-year highs on Monday, plunged 11% on Tuesday after President Trump suggested the conflict could end soon, then dropped a further 20% temporarily after the US Energy Secretary mistakenly suggested a tanker had successfully transited the strait.
The IEA holds approximately 1.2 billion barrels in public reserves, plus 600 million in mandatory commercial stocks — enough, it says, to cover around 124 days of lost Gulf supplies.