Why historic release of oil reserves may not tame surging prices

Oil prices continue to soar despite the International Energy Agency’s plans to release 400m barrels into the market.Oil tanks are pictured in front of the BP refinery in Gelsenkirchen, one of the biggest fuel producers in Germany, on March 11, 2026 [Martin Meissner/AP Photo]Published On 12 Mar 2026Global oil prices are continuing to surge despite the International Energy Agency’s (IEA) announcement of the largest release of emergency reserves in history.Brent Crude, the international benchmark, rose about 15 percent after the Paris-based IEA on Wednesday announced plans to release 400 million barrels to stabilise prices amid the fallout of the United States and Israel’s war with Iran.Recommended Stories list of 4 itemslist 1 of 4New files show British PM warned of ‘reputational risks’ with Mandelsonlist 2 of 4Massive fires on two oil tankers after attack in Iraqi waterslist 3 of 4‘Proud as a Qatari’: Country’s PM salutes resilience amid Iranian attackslist 4 of 4Eight Arab, Islamic countries condemn Israeli closure of Al-Aqsa Mosqueend of listOil prices hovered at about $100 a barrel as of 02:00 GMT on Thursday, up more than 35 percent compared with before the start of the war.While the IEA’s release may offer some relief in the short-term, it will likely have a minimal effect on lowering prices if the Strait of Hormuz remains effectively closed, according to market analysts.“It’s not a silver bullet to solve everything. You have to solve the underlying problem,” Maksim Sonin, an energy executive who is a fellow at Stanford University’s Center for Fuels of the Future, told Al Jazeera.“Markets trade on expectations, and so far they are on the concerned side,” Sonin said.Traffic through the strait, which is bordered by Iran, Oman and the United Arab Emirates, has come to an effective halt amid Tehran’s threats against shipping in the region, blocking about one-fifth of the global oil supply.Iran’s Islamic Revolutionary Guard Corps (IRGC) said on Wednesday that it would not allow “even one litre of oil” through the waterway and the world should expect oil to soar to $200 a barrel.At least five commercial ships were attacked in the region on Wednesday, including two oil tankers in the Iraqi port of al-Faw.US President Donald Trump has offered mixed messages on how long the war on Iran could last, variously saying that it would end “very soon” and that US forces had still not “won enough”.The Thai bulk carrier Mayuree Naree is seen near the Strait of Hormuz after an attack on March 11, 2026 [Royal Thai Navy/AFP]‘Temporary relief’Oil prices have been on a roller coaster ride in recent days amid fears of prolonged turmoil in the global energy sector.Brent Crude soared as high as $119 on Monday, then plunged below $80 on Tuesday after US Energy Secretary Chris Wright falsely claimed that the US Navy had escorted an oil tanker through the strait.While the IEA’s release of strategic reserves is historic in scope, it seeks to temporarily plug a massive – and rapidly growing – shortfall.About 20 million barrels of oil pass through the strait each day under normal circumstances.After 12 days of war, the global shortfall already exceeds 200 million barrels – more than half of the IEA’s planned release.“If this continues, the release will only buy temporary relief,” Gregor Semieniuk, a professor of public policy and economics at the University of Massachusetts Amherst, told Al Jazeera.“My sense is the release is already priced in – that’s why prices fell to the 80s after rising to almost $120 a barrel,” Semieniuk said.“Moreover, once it’s released, part of the firepower is gone and a continued blockage is even more threatening,” he said.“So if market expectations are that the reserve release cannot make up all the shortfall, it will do little to check prices beyond what it has already done,” he added.There are also constraints on how quickly the IEA’s 32 member countries will be able to get fresh supplies to the market.JPMorgan has estimated that, based on past precedent, IEA member countries would be able to boost their output by 1.2 million barrels per day at most – a fraction of the daily volume that had moved through the strait.In its announcement on Wednesday, the IEA did not provide an exact timeline for the release, saying it would provide further details in due course.While the IEA coordinates the release of international stockpiles totalling some 1.8 billion barrels, reserves are held and managed by individual member countries.The US Department of Energy said on Wednesday that it would release its portion of the reserves – totalling 172 million barrels – beginning next week. Japanese Prime Minister Sanae Takaichi said her government would start releasing 80 million barrels as early as Monday.‘History shows prices can move sharply higher again’“If the roughly 400 million barrels of strategic reserves being discussed convinces traders that supply can meet demand in the near term, it can calm prices for a while,” Chad Norville, president of industry publication Rigzone, told Al Jazeera.“But if the disruption persists and the market begins to doubt that replacement supply is sufficient, history shows prices can move sharply higher again.”The IEA has coordinated releases of reserves on five previous occasions, with varying results.After the IEA announced plans to release 60 million barrels shortly after Russia’s 2022 invasion of Ukraine, oil prices almost immediately surged about 20 percent to $113 a barrel, though prices eased gradually over the proceeding months.The IEA’s efforts to boost supply in the run-up to the 1991 Gulf War, by contrast, were widely credited with bringing stability to the market, with prices plunging by about one-third the day after the US began air strikes on Iraq.Semieniuk, the University of Massachusetts Amherst professor, said he expects prices to rise dramatically if the strait’s effective closure extends into next week.“Unless the conflict is ended this week, I wouldn’t be surprised for the oil price to pass $150 a barrel eventually, after effects from strategic buffer stocks have worn out,” Semieniuk said.“I can’t make a forecast as to how high the oil price goes, but using back of the envelope calculations, a 20 percent supply cut could in principle lead to above $200 per barrel as demand competes for a limited supply,” he said.Oil tankers and cargo ships line up in the Strait of Hormuz as seen from Khor Fakkan, United Arab Emirates, on March 11, 2026 [Altaf Qadri/AP Photo]