The International Energy Agency is considering a further release of emergency oil stocks as the war involving Iran continues to disrupt global supply and unsettle energy markets.
Speaking in Canberra on 23 March, IEA Executive Director Fatih Birol said the agency was consulting governments in Asia, Europe, North America and the Middle East and would act again if market conditions required it.
Birol said no fixed crude price would automatically trigger a new coordinated release. Instead, the agency would assess market conditions, analyse the scale of the disruption and consult member states before deciding whether further intervention was necessary. He said the IEA was prepared to move again, but made clear that stock releases were only a temporary stabilising measure rather than a solution to the underlying crisis.
The warning comes less than two weeks after the IEA announced the largest coordinated stock release in its history. On 11 March, the agency said its 32 member countries had unanimously agreed to make 400 million barrels of oil from emergency reserves available to the market in response to disruptions caused by the conflict in the Middle East. The IEA said at the time that the release represented roughly 20 per cent of the total emergency stocks held across the system.
According to Birol, the current crisis has already removed 11 million barrels a day from global oil supply. In Canberra he said this exceeded the combined supply losses of the oil shocks of 1973 and 1979. He also argued that the damage to gas markets was more severe than the disruption seen after Russia’s full-scale invasion of Ukraine, saying the present crisis had cut roughly 140 billion cubic metres from gas markets compared with around 75 billion cubic metres during the earlier European gas shock.
He described the situation as “very severe” and warned that no country would be insulated from its economic effects if the conflict continued. AP reported Birol as saying the global economy faced a “major, major threat” from the war. He added that 40 energy assets across nine countries had been severely or very severely damaged, affecting not only oil and gas but also the trade in fertilisers, sulphur, petrochemicals and helium.
Birol identified the Strait of Hormuz as the critical issue. He said the single most important step towards easing the crisis would be to reopen the strait, through which a substantial share of global oil and liquefied natural gas normally passes. Reuters reported him telling the National Press Club that the Asia-Pacific region was at the forefront of the current oil crisis because of its dependence on imported fuel and on other commodities transported through Hormuz. Those include fertiliser and helium, both of which are strategically important for industrial supply chains.
His appearance in Canberra marked the start of an international tour that will also take him to Japan ahead of a Group of Seven meeting. Birol met Australian Prime Minister Anthony Albanese before travelling on. The choice of Australia as the first stop reflected the extent to which Asian economies are exposed to the present shock, particularly those with limited domestic supply and long supply chains.
While the IEA’s emergency stock system remains one of the most important tools available to consuming countries, Birol suggested that governments might also need to revive demand-reduction measures. He referred to steps previously promoted by the IEA and used in Europe in 2022, including lower speed limits and increased working from home, as examples of how oil consumption could be reduced quickly. Reuters reported that he said such measures had previously lowered energy use, although individual governments would need to decide which policies were practical in their own circumstances.
Birol also addressed Australia’s fuel preparedness. Although Australia remains below IEA requirements for overall liquid fuel holdings, he said the current government had improved the position and described the country’s 30 days of diesel stocks as “solid”. That comment is likely to offer some reassurance in a country where fuel security has long been a strategic concern, particularly in the event of prolonged maritime disruption.
The broader message from Canberra was that the IEA is keeping its options open. The 400 million-barrel release announced on 11 March was intended to calm markets and reduce immediate economic pain, but Birol’s remarks indicate that the agency does not regard that move as sufficient on its own if the conflict continues. As he put it, emergency stock drawdowns may comfort markets, but they cannot resolve the cause of the shock. Until energy flows through the Gulf are restored, further intervention remains possible.
