IEA plans to propose releasing record oil reserves, G7 leaders hold emergency phone call, may oil prices face a third wave of violent fluctuations tonight?

# Ye Zhen

Source: Wallstreetcn

The International Energy Agency (IEA) is reportedly set to propose the **largest-ever release of strategic crude oil reserves** in its history, potentially exceeding the 182 million barrels released during the 2022 Russia-Ukraine conflict. Separately, G7 leaders will hold an emergency teleconference on Wednesday to address the Iran crisis and surging energy prices. Oil prices have already swung violently twice this week, and tonight could mark a third major volatility trigger, with global energy markets on edge.

The International Energy Agency (IEA) is poised to propose the largest release of strategic crude oil reserves in its history, aimed at cooling international oil prices that have spiked sharply amid the U.S.-Israel conflict with Iran.

According to the Wall Street Journal, citing officials familiar with the matter, the planned release is expected to surpass the 182 million barrels deployed by IEA member countries during the 2022 Russia-Ukraine war. IEA members are set to vote on the proposal Wednesday; it will pass if no member objects, but a single dissent could delay the plan. News of the IEA proposal briefly pushed international oil prices lower, with WTI crude futures turning negative by 0.4%.

Separately, Reuters reports that French President Emmanuel Macron, current holder of the G7 presidency, will convene G7 leaders for a Wednesday teleconference focused on the Iran crisis and the sharp rise in energy prices. Earlier, G7 energy ministers failed to reach consensus on a strategic reserve release during Tuesday’s talks, instead asking the IEA to assess the situation before any action is taken.

Bloomberg’s senior commodities reporter Javier Blas revealed the video call is scheduled for 2:00 PM GMT (10:00 PM Beijing time Wednesday), with discussions centered on the “energy situation” and the Strait of Hormuz. He added, “I doubt this will be just a verbal intervention.”

Oil prices have already seen two extreme swings this week. On Monday, benchmark prices surged to nearly four-year highs. On Tuesday, they plummeted 11% after U.S. President Donald Trump predicted the Middle East conflict could end soon. Later Tuesday evening, a false U.S. Energy Department tweet claiming the U.S. Navy had successfully escorted a tanker through the Strait of Hormuz briefly sent prices crashing 20%. If G7 leaders announce substantive measures after their meeting, tonight could trigger a third consecutive session of major price volatility.

## IEA’s massive stockpiles provide intervention capacity

The IEA holds ample reserves to address current supply shortages. IEA Executive Director Fatih Birol said Monday member countries hold 1.2 billion barrels of public reserves, plus an additional 600 million barrels of mandatory commercial stockpiles. Rough calculations show these reserves equate to roughly 124 days of lost supply from the Gulf region.

While crude prices retreated below $84 that day, prices for refined products like diesel continued climbing. A large-scale IEA release, if implemented, would directly inject liquidity into the market and ease physical spot tightness caused by supply disruptions.

## G7 energy ministers fail to agree on reserve release

Ahead of Wednesday’s leaders’ call, G7 energy ministers held talks Tuesday but could not reach a consensus on releasing strategic petroleum reserves. According to Reuters, ministers instead asked the IEA to conduct a situation assessment before deciding, effectively deferring the decision to a higher level.

This outcome cooled market expectations for an immediate policy response but also means the leaders’ teleconference carries greater political weight and decision-making authority than ministerial-level talks, making tonight’s call highly anticipated.

## Historical impact of reserve releases

Historically, the market impact of strategic reserve releases has been mixed. After the 2022 Russia-Ukraine war began, IEA members released reserves twice in quick succession. Initially, this反而 pushed prices up 20% as traders interpreted it as a signal the oil crisis was worse than expected. Analysts note, however, that the releases ultimately helped stabilize prices.

One notably successful intervention occurred during the 1991 Gulf War. Then-U.S. President George H.W. Bush ordered the first-ever drawdown of the U.S. Strategic Petroleum Reserve (SPR) on the night coalition forces attacked Iraq, with IEA members releasing reserves in coordinated fashion. On the first day of the U.S.-led offensive, oil prices plunged more than 20%, effectively stabilizing global energy markets during wartime.

## Strait of Hormuz crisis disrupts global supply

The core driver behind the IEA’s proposed reserve release is addressing the massive supply disruption caused by the near-total closure of the Strait of Hormuz. A critical waterway connecting the Persian Gulf to global markets, the Strait handles roughly one-fifth of daily global oil supplies. Energy shipments through the channel have nearly ground to a halt due to Iran’s threats against oil tankers.

This risk of oil supply disruptions from Middle East geopolitical conflict is precisely why Western nations and their allies founded the IEA in 1974, following the Arab oil embargo. As a coordinating body, the IEA sets crude reserve standards for members and uses coordinated releases to shield the global economy from oil market volatility.

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