The Executive Director of the International Energy Agency (IEA) recently reaffirmed at an Atlantic Council meeting that the agency is prepared to take action and release further oil reserves to stabilize the market if the energy shock triggered by the conflict involving the US, Israel, and Iran continues to worsen. While there is hope that deploying strategic reserves again will not be necessary, preparations are in place should the need arise. This statement comes just as member countries completed the largest-ever oil reserve release last month, with over 30 member states agreeing to release 400 million barrels of crude oil and refined products from strategic reserves, including 172 million barrels released by the US alone.

The current situation is classified as the largest energy security threat in history. Data shows that since the conflict broke out in late February, more than 80 oil and gas facilities in the Middle East have been damaged, covering production facilities, oil depots, and refineries, with over one-third classified as severely or critically damaged. This crisis has caused the most severe disruption to global energy supply in history, with global daily oil supply losses reaching approximately 13 million barrels, far exceeding the losses of about 5 million barrels per day during the 1973 and 1979 oil shocks. The scale of natural gas supply disruption also exceeds losses during the 2022 Russia-Ukraine war.

The release of strategic reserves is seen as a measure that treats symptoms rather than the root cause. Even if all 400 million barrels of reserves are released into the market, calculated against the current daily supply gap of about 8 million to 13 million barrels, it would only cover approximately 30 to 50 days. More seriously, due to severe damage to infrastructure such as oil fields, terminals, and refineries, even if the conflict ends immediately, regional energy supply recovery to pre-war levels could take up to two years. Currently, about 20% of global oil trade relies on transportation through the Strait of Hormuz, but the war has caused crude oil and refined product exports through the strait to fall to less than 10% of pre-war levels.

After negotiations between the US and Iran in Islamabad, Pakistan broke down on April 12, the US officially launched a naval blockade on Iranian ports the following day, with more than 15 US warships deployed to support the action, further exacerbating the already tense situation. The IEA Executive Director launched a global tour last week, choosing Australia as the first stop precisely because the Asia-Pacific region is at the forefront of this oil crisis. The Japanese Prime Minister has personally requested preparation for additional reserve releases to cope with a prolonged conflict. Data shows that current global daily oil flow has decreased by about 13%, and liquefied natural gas flow has decreased by 20%. Brent crude futures were reported at approximately $102.8 per barrel on Monday, up over 45% from the pre-war level of $70. If the Strait of Hormuz remains closed throughout April, the global loss of crude oil and refined products will equal twice the volume of March, facing a Black April.