"The challenges we face in the oil market are unprecedented in scale," said IEA Director General Fatih Birol in a press release.
The market reaction was cautiously positive. The stock market decline in Stockholm narrowed to 0.4 percent and the world market price of crude oil fell to $89 per barrel. This compares with a peak of over $119 per barrel on Monday.
This, of course, signals that the situation is being taken seriously, but it is not at all unexpected, says Christian Kopfer, commodities analyst at Handelsbanken.
Mitigating effects
Prior to the announcement, both Germany and Japan had declared their readiness to replenish the market with oil reserves.
"The IEA yesterday asked member countries to release 400 million barrels of oil reserves. We will follow this request and contribute our share," German Economy Minister Katherina Reiche said, according to Bloomberg.
Sweden, which is one of the 32 member states of the Paris-based IEA, announced that it supports the initiative.
"In a serious situation, Sweden is contributing to stabilizing oil prices and preventing households from being affected by cost increases," said Minister of Energy and Enterprise Ebba Busch (KD) in a press release, which also states that Sweden's share is approximately two million barrels within 90 days.
Earlier on Wednesday, the energy ministers of the G7 countries - from France, Italy, Japan, Canada, the United Kingdom, Germany and the United States - said in a joint statement that they support the use of strategic oil reserves in principle.
This is something that mitigates the effects in the short term, says Kopfer.
The previous record for the use of oil reserves of 182 million barrels stems from the crisis following Russia's full-scale attack on Ukraine in 2022.
20 million barrels
Using strategic oil reserves has become a topic of discussion since shipping traffic through the Strait of Hormuz in the Persian Gulf has essentially come to a complete halt. This is because Iran - following an attack by the US and Israel on February 28 - has begun attacking civilian ships and the oil and gas industry in other countries in the region.
Global oil consumption is around 100 million barrels per day. Normally around 20 million barrels per day pass through the Strait of Hormuz.
According to The Wall Street Journal, the 32 member countries of the IEA together have reserves equivalent to approximately 124 days of lost supply from the Gulf states.
