The International Energy Agency reports that its member countries have enough oil reserves to last 90 days, should the Strait of Hormuz be completely closed, which would significantly impact global oil prices.
According to the International Energy Agency (IEA), the 32 member countries hold approximately 1.8 billion barrels of oil in their emergency strategic reserves, enough to sustain 90 days of operations should the Strait of Hormuz be entirely shut down. The closure of this critical maritime route for oil transport would disrupt around 20 million barrels of oil per day, leading to an expected shock in global energy prices. This situation highlights the vulnerability of the global oil supply chain and the importance of preparedness for such eventualities.
Furthermore, the IEA’s decision to release 400 million barrels as part of its strategy to mitigate potential disruptions represents over 20% of the reserves. This marks the sixth time in history that the agency has resorted to such measures, with previous instances occurring in 1991, 2005, 2011, and in two separate occasions in 2022. The IEA was established in 1974 as a counterbalance to the Organization of the Petroleum Exporting Countries (OPEC) in response to the oil crisis of the preceding year, aiming to enhance global energy security.
The potential closure of the Strait of Hormuz presents not only a challenge for oil supply but also raises concerns regarding the stability of energy prices globally. As the world grapples with energy transitions and geopolitical tensions, maintaining strategic reserves becomes a key factor in managing any crises that affect oil supply. The provisions made by IEA member countries signal a proactive stance in ensuring energy stability in an uncertain global landscape.
