When the International Energy Agency announced the largest emergency oil reserve release in its history, leaders around the world presented it as a major collective response to stabilise markets. Governments highlighted the unprecedented scale of the intervention and framed it as a coordinated effort to address the global energy shock. However, once the numbers were examined closely, the scale of the response appeared far less reassuring.
Global oil consumption currently stands at roughly 103 million barrels per day. Against that demand, the IEA’s total emergency release amounts to about 400 million barrels. Simple arithmetic reveals that this volume represents only around four days of global oil consumption. Despite the dramatic announcement and initial market reaction, the relief offered by the release is limited in both scale and duration.
The current crisis was triggered after military strikes by the United States and Israel targeted Iran. Tehran responded by closing the Strait of Hormuz, one of the most critical energy chokepoints in the world. This narrow passage between Iran and Oman normally carries about 20 million barrels of oil and petroleum products every day, representing roughly one-fifth of global supply.
There are few viable alternatives for transporting such enormous volumes of crude. Routing tankers around the Cape of Good Hope would extend journeys by approximately 20 days. Existing pipelines lack the capacity to replace Hormuz shipments at the necessary scale. As a result, when traffic through the strait was disrupted, the impact was felt across global industry, transport, and energy systems almost immediately.
Oil markets reacted quickly. Crude prices surged toward 120 dollars per barrel in the days following the escalation. Prices briefly eased to around 100 dollars after the IEA intervention was announced but rebounded once traders assessed the limited supply impact. By 12 March, Brent crude was trading near 98 dollars per barrel, representing a roughly 20-dollar increase within a single month.
The emergency reserves will also not enter the market all at once. The United States plans to release about 172 million barrels from its Strategic Petroleum Reserve over a period of 120 days. Japan began releasing its 80 million barrels from mid-March, while European countries and South Korea will distribute their contributions gradually over several weeks. At a rate of roughly one to two million barrels per day, the combined release may only offset between 10 and 20 percent of the supply gap, and only temporarily.
Economic analysts have warned that the measure is effective only if the conflict ends quickly. Should the war continue for a month, the world could lose around 350 million barrels of supply due to the Hormuz disruption. In such a scenario, the entire emergency reserve release would largely be consumed within that period.
The situation has been further complicated by supply decisions within the Gulf. Major producers such as Saudi Arabia, the United Arab Emirates and Iraq have reportedly reduced output as storage facilities filled with oil that could not be exported due to shipping disruptions. When exports stall, production often slows as storage capacity reaches its limits.
Security risks have also increased in the region’s energy infrastructure. The UAE temporarily shut down its largest refinery after a drone strike occurred nearby, and more than four million barrels per day of refining capacity across the Gulf is now considered vulnerable to further disruption.
The global consequences are especially severe for countries heavily dependent on Gulf energy exports. Japan imports about 70 percent of its oil through the Strait of Hormuz, while India sources more than 80 percent of its crude oil imports from the Gulf region. Many countries in sub-Saharan Africa rely on liquefied petroleum gas transported through the same route for everyday cooking fuel.
According to the International Monetary Fund, every sustained increase of 10 dollars per barrel in oil prices can reduce global economic growth by between 0.5 and 1 percent each quarter. With prices already rising by around 20 dollars within weeks, the economic effects could be significant.
For Iran, the strategy behind the disruption appears straightforward. As the conflict continues, rising fuel prices increase inflation and economic pressure in energy-importing countries, particularly in the United States. Each week of elevated oil prices places additional strain on political and economic stability abroad.
Even the IEA has acknowledged that emergency reserves cannot solve the crisis indefinitely. The agency’s executive director, Fatih Birol, stated that the most important factor for restoring stability to energy markets is the reopening of the Strait of Hormuz. Until that happens, global energy markets remain dependent on temporary reserve releases and uncertain geopolitical developments.
