The world’s energy watchdog will consider releasing further emergency crude stocks into the global market to cool rising oil prices after warning that it will take time for markets to recover from the ongoing crisis in the strait of Hormuz.
Fatih Birol, the head of the International Energy Agency, said its members continued to hold large reserves of emergency oil stocks even after agreeing to the biggest release of government crude in the history of the market, meaning more emergency oil reserves could still be released “as and if needed”.
It came as the price of Brent crude rose almost 3% within minutes of the market opening on Monday, to about $106.50 a barrel. It later dipped by about 2%, but was still trading at just above $100 a barrel.
About 100m barrels of emergency oil stockpiles will be made available to buyers in Asia this week in the first release from a planned 400m barrel deluge of crude into the global market to make up for the lost exports from Gulf nations, which has caused global oil prices to surge by 40% this month.
“Despite this huge release, we still have a lot of stocks left,” Birol said. “This current stock release, once it is completed, will reduce the emergency stocks in IEA countries only by about 20%.”
Birol warned that although the emergency reserves would provide a buffer for now, it was vital to reopen the strait of Hormuz to allow Gulf oil and gas to reach the global market.
Donald Trump on Monday repeated his call to global leaders to help unblock the strait of Hormuz, which before the crisis transported a fifth of the world’s seaborne crude from the world’s biggest producers to the international buyers.
“Some are very enthusiastic about it, and some aren’t,” Trump told reporters. “Some are countries that we’ve helped for many, many years. We’ve protected them from horrible outside sources, and they weren’t that enthusiastic. And the level of enthusiasm matters to me.”
The US retaliated to Iran’s effective blockade on the vital oil trade route with the weekend attack on Kharg Island, which is home to the infrastructure which exports about 90% of the Middle Eastern country’s crude.
Although the US military did not damage the oil hub, the attack raised further concerns over the Gulf’s crude production, which is falling as producers are forced to shut their oilfields.
Birol said global governments should be prepared for if the conflict continues for a while longer, and warned that global energy trade would take some time to recover even after the conflict ends.