The International Energy Agency will convene an extraordinary meeting of member states on Tuesday to discuss the possibility of releasing oil reserves to deal with supply disruptions caused by the Iran war.
IEA Director-General Fatih Birol said in a statement that more than 30 member states will “assess the current security of supply and market conditions to inform subsequent decisions on whether to make emergency stocks (…) available to the market.”
IEA member countries are primarily developed countries in North America, Europe, and Northeast Asia. Together they hold approximately 1.2 billion barrels of oil. An additional 600 million barrels are held in industry stocks under government mandates.
Oil prices fell more than 11% as the market expected oil stocks to be released. Supply disruptions caused prices to soar to a high of nearly $120 a barrel on Monday.
Energy ministers from G7 countries met early Tuesday to discuss options to deal with supply disruptions, Birol said. G7 members are Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. They are also members of the IEA.
The United States believes a joint release of 300 million to 400 million barrels, or 25% to 30% of the 1.2 billion barrels in stockpiles, is appropriate, officials told CNBC on Monday.
Oil tanker traffic through the crucial Strait of Hormuz has been severely disrupted as ships worry about the Iranian threat. This caused the largest oil supply disruption in history, according to an analysis by consulting firm Rapidan Energy. Before the outbreak of war, about 20% of the world’s oil consumption passed through the Strait.
Gulf Arab oil producers are cutting production as they struggle to export crude through the strait due to the war. Saudi Aramco CEO Amin Nasser warned on Tuesday that a war with Iran would have “catastrophic consequences” for global oil markets the longer it lasts.
—CNBC’s Eamon Javers contributed to this report.
