By Dalal Street Investment Journal (DSIJ)
Despite IEA members releasing the largest-ever oil stockpiles amid escalating Middle East tensions, crude oil prices soared to $100 per barrel. This unprecedented move, marking the sixth such action since 1974, follows previous releases in 1991, 2005, 2011, and twice in 2022. So, why is oil still surging? The answer may surprise you..
IEA member countries, holding emergency reserves of over 1.2 billion barrels, along with an additional 600 million barrels of industry stocks held under government obligation, are set to carry out the largest coordinated oil stock release in the agency’s history. This move marks the sixth such action since the IEA's inception in 1974, following previous releases in 1991, 2005, 2011, and twice in 2022.
The ongoing conflict in the Middle East, which began on February 28, 2026, has severely disrupted oil flows through the Strait of Hormuz, with crude and refined exports now at less than 10% of pre-conflict levels. As a result, regional operators are being forced to halt or reduce production.
In 2025, around 20 million barrels of crude and oil products passed through the Strait daily, representing about 25% of global seaborne oil trade. With limited alternatives to bypass the Strait of Hormuz, the situation has prompted urgent actions from IEA members.
The International Energy Agency (IEA) has officially triggered the "emergency alarm" for the global economy. On Wednesday, all 32 member countries spanning North and South America (like the U.S., Canada, and Colombia), Europe (including the UK, Germany, and France), and the Asia-Pacific region (such as Japan, South Korea, and Australia) This is the largest coordinated release since the agency was formed in the 1970s, nearly doubling the previous record set during the 2022 Ukraine crisis. The United States is taking the lead in this effort, with Energy Secretary Chris Wright announcing that the U.S. will contribute 172 million barrels from its Strategic Petroleum Reserve (SPR).
“The oil market challenges we are facing are unprecedented in scale. I am very glad that IEA member countries have responded with an emergency collective action of unprecedented size,” said IEA Executive Director Fatih Birol. “Oil markets are global, so the response to major disruptions needs to be global too. Energy security is the founding mandate of the IEA, and I am pleased that IEA members are showing strong solidarity in taking decisive action together.”
While the U.S. provides the bulk of the supply, other major economies are moving quickly to stabilise the market. Japan, which is highly dependent on Middle Eastern oil, has pledged to release 80 million barrels from both its national and private reserves. The prime minister of Japan, Sanae Takaichi, emphasized the urgency by stating that Japan would act as early as March 16th rather than waiting for formal paperwork. India, another massive oil importer, also welcomed the IEA’s move, stating it stands ready to take its own measures to align with global efforts and keep the markets steady.
Despite the massive-sounding number of 400 million barrels, there is a catch: it is a temporary fix for a massive problem. CNBC sources report that this record-breaking release would cover just 20 days of the supply lost in the Strait of Hormuz. Furthermore, the US contribution alone will take about 120 days to fully deliver. Moving that much oil through pipelines and onto ships takes significant time, meaning it could be weeks or even months before this "emergency" oil actually reaches the gas stations and factories that need it.
Because of these delays, crude oil prices are not falling. In fact, they jumped nearly 6% to 8% immediately after the announcement. Brent crude has hit $100 per barrel, while U.S. oil (WTI) rose to $95. The situation is being fueled by aggressive steps taken by Iran, which warned that the world should prepare for $200 a barrel as its forces continue to target merchant ships. Current market sentiment reflects a state of panic, and the prices will likely keep rising until either the conflict ends or "demand destruction" occurs.
Perhaps the most worrying part of the IEA’s decision is what it says about the future. By releasing such a massive amount of oil now, the agency is signaling that it expects the U.S.-Israel war with Iran to last for months, not weeks. Traders are cautious because they know these reserves must eventually be refilled, which will keep demand and prices high even after the fighting stops. As long as a fifth of the world’s oil remains stuck behind the blockade in the Strait of Hormuz, the record-breaking release of reserves acts as little more than a temporary bandage on a very deep wound.
SEBI Registered Research Analyst (INH000006396).
Founded in 1986, Dalal Street Investment Journal (DSIJ) brings decades of experience in India’s equity markets. DSIJ's research combines fundamental analysis with price action, guided by disciplined risk management and capital preservation. They follow a structured, data-driven approach designed to help investors and traders make informed decisions beyond short-term market noise.
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