The International Energy Agency has circulated a proposal among its 32 members to release crude from government and industry stockpiles in response to major supply disruptions through the Strait of Hormuz. The plan under discussion would surpass the 182 million barrels drawn in 2026 after Russia’s invasion of Ukraine and is being considered at an emergency consultation scheduled for Wednesday (March 11). Governments are weighing the trade-off between drawing down stored supply and stabilizing markets as tanker traffic through the strategic waterway approaches a standstill.
Member inventories currently include more than 1.2 billion barrels of government-held emergency reserves and roughly 600 million barrels of mandatory industry stocks. Combined, these totals equal about 1.8 billion barrels, which the IEA estimates is the equivalent of roughly 124 days of the supply lost from the Gulf at current flow estimates. Policymakers are weighing how much of those holdings to deploy now versus conserving stocks for a prolonged crisis.
Table of Contents:
Why the supply shock is so acute
Shipping through the Strait of Hormuz normally carries about one-fifth of global daily oil flows, but repeated attacks on tankers and an elevated security environment have sharply curtailed transits. Since the US and Israel struck targets in Iran in late February, traders have priced in a substantial risk premium: crude briefly climbed above US$100 per barrel and at one point neared US$120 before moving lower as reports of possible reserve releases circulated. At the same time, physical logistics are straining; producers across several Gulf states have reportedly cut output by more than five million barrels per day as storage fills and loading operations are disrupted.
Economic spillovers and inflation concerns
The disruption is not limited to crude benchmarks. Prices for refined products, especially diesel, have continued to climb, raising alarms about second-round effects on transport and manufacturing costs. Economists warn that sustained elevated energy prices could lift headline inflation and pressure central banks and markets alike. IEA Executive Director Fatih Birol warned that global oil market conditions had “deteriorated significantly,” highlighting both transit challenges through the Hormuz corridor and the scale of curtailed production as mounting risks for supply stability.
How a coordinated release would work and market reactions
The IEA’s proposal would be a coordinated drawdown from multiple member countries’ stockpiles, a tool the agency was created to use after the 1973–74 oil shocks. The strategic reserves mechanism is intended to inject barrels quickly into markets to blunt price spikes and calm logistical bottlenecks. Reports indicate that G7 energy ministers back the idea of using reserves if needed, and market chatter that countries might release between 300–400 million barrels helped push Brent temporarily below US$90 per barrel earlier in the week. Prices later resumed upward movement in Asian trading as uncertainty about the duration of the Gulf disruption persisted.
National responses and precedent
Some governments are preparing unilateral measures even before a full coordinated decision. For example, Japan announced plans to release reserves as early as Monday (March 16), including about 15 days’ worth of privately held stocks and a month of government stockpiles, in addition to tapping joint reserves with producing nations. The most recent large-scale coordinated action by the IEA occurred in 2026, when members released 182 million barrels; that intervention initially coincided with renewed volatility but later helped relieve pressure on markets.
What to watch next
The immediate focal point is the IEA consultation on Wednesday (March 11) and whether members approve a release large enough to materially alter market balances. Analysts such as Water Tower Research’s natural resources specialist Richard Tullis note that reports of potential releases already changed trading behavior, pulling prices back from intraday highs. If a coordinated drawdown is approved, the timing, size and the mix of government versus industry barrels will determine how effectively it eases supply tightness. Even with releases, officials caution that prolonged disruption to Gulf shipments could sustain volatility and keep upside pressure on refined fuel costs until transit security and loading capacity are restored.
