Up to 400 million barrels of oil could be on the way to market. On Monday evening, the G7 countries announced their willingness to act to keep oil prices low, which have risen sharply after the US and Israeli attacks on Iran that began ten days ago.
Since then, U.S. President Donald Trump has signaled a possible end to the conflict, sending oil prices down to around $90 a barrel from a high of just over $119 on Tuesday morning. Nevertheless, the price for North Sea oil is almost 50 percent higher today than at the turn of the year.
But how much oil can the G7 countries release and what impact would that have on oil prices?
Joint interventions with Oil reserves are usually managed through the International Energy Council (IEA), whose member countries together have reserves of around 1.2 billion barrels of oil. The aim is to stabilize the market by quickly expanding the offering. This happened, for example, after the Russian invasion of Ukraine four years ago and in connection with the outbreak of civil war in Libya in 2011.
According to information from the Financial Times, among others, a release of 300 to 400 million barrels of oil is being discussed. It would be equivalent to up to a third of total reserves and would be the largest release ever.
But even with record sales of reserves, it is not certain that the Strait of Hormuz can be replaced.
Around 20 million barrels of oil and oil products flow through the strait every day. Some may be transported via pipelines from Saudi Arabia and the United Arab Emirates. According to IEA calculations, the two countries can increase their exports via oil pipelines by around 4 million barrels per day compared to before the outbreak of war if the pipelines are at full capacity and are not exposed to attacks or bombings.
Facts.International Energy Council Oil Reserves
● The International Energy Council, IEA, was founded after the 1973-1974 oil crisis with the aim of working together to secure the energy needs of its members in future crises.
● The organization currently consists of 32 member countries, including Sweden. Another 13 countries, including China and India, are not full members.
● The IEA requires members that import more oil than they export to maintain reserves equivalent to 90 days of oil consumption. However, even net exporters like the United States tend to maintain strategic oil reserves.
● In total, the IEA’s total oil reserves currently amount to around 1.2 billion barrels.
At the same time, Iran continues to export oil across the Strait. There are no reliable figures, but according to the Tanker Trackers website, exports have been estimated at the equivalent of 1.5 million barrels per day since the conflict began.
Then around 14.5 of the 20 million barrels of oil and oil products that pass through the Strait of Hormuz every day are still missing. If the IEA released a total of 400 million barrels of oil, that would correspond to around 28 days of normal oil supply.
But that is unlikely that the IEA could release oil reserves quickly enough to fully cover the Strait of Hormuz standoff. In the past, they have pumped out a maximum of 1.3 million barrels per day, although theoretical capacity could be over 3.5 million barrels per day, according to major bank Morgan Stanley.
A large portion of the oil reserves are also in the United States, where use is politically sensitive as supplies are at a historically low level of around 60 percent after the oil price spike in 2022. Donald Trump has previously promised to fill them to maximum capacity.
The IEA is not the only actor with significant oil reserves. Last but not least, China has significantly replenished its reserves in recent years and is sitting on an estimated 1.2 to 1.4 billion barrels of oil. This equates to approximately 140 days of import into the country. However, so far Chinese authorities have given no indication that they intend to use the reserves in the near future.
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