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The International Energy Agency’s executive director, Fatih Birol, has indicated that oil producers in the Middle East are beginning to cut back on production. This change comes as a result of limited market access and a lack of available storage capacity.
Birol also highlighted recent attacks that have damaged energy infrastructure, leading to significant disruptions in refinery operations. These disruptions are particularly affecting the supply of jet fuel and diesel.
Currently, IEA member countries collectively hold over 1.2 billion barrels of oil in public emergency reserves, with an additional 600 million barrels stored by the industry under government mandates.
In a strategic move, Iran has halted cargo traffic through the Strait of Hormuz, a critical passage where roughly 20% of the world’s oil is transported from the Persian Gulf to the Indian Ocean. Iran’s actions, including targeting oil fields and refineries in Gulf Arab nations, are intended to apply economic pressure globally, urging the United States and Israel to cease their military actions.
In response to an IEA appeal, Germany and Austria announced on Wednesday that they would begin releasing portions of their oil reserves. This decision is part of a coordinated effort to release 400 million barrels to mitigate surging energy prices triggered by the conflict involving Iran. Japan has also committed to starting the release of its reserves from Monday.
Group of Seven energy ministers met on Tuesday (Wednesday AEDT) at IEA headquarters in Paris to look at ways to bring down prices. Birol said afterward that they discussed all available options, including making IEA emergency oil stocks available to the market.
The IEA reserves were established in 1974 following the Arab oil embargo.
“This is a major action aiming to alleviate the immediate impacts of the disruption in markets,” Birol added.
“But, to be clear, the most important thing for a return to stable flows of oil and gas is the resumption of transit through the Strait of Hormuz.”
The G7 is comprised of the leading industrialised nations of Canada, the United States, France, Italy, Japan, Germany and Britain. Austria is not a member. The group’s leaders were set to hold a meeting via videoconference later on Wednesday to discuss energy issues.
The German economy ministry, Katherina Reiche, said the IEA asked Germany to release 2.64 million tons (2.39 million tonnes) of its oil reserves. It was not immediately clear how much Austria was releasing.
She said it would take a couple of days before the delivery of the first quantities.
“Germany stands behind the IEA’s most important principle of mutual solidarity,” Reiche said.
The G7 energy ministers announced on Tuesday that they supported in principle “the implementation of proactive measures to address the situation, including the use of strategic reserves.”
According to the IEA, export volumes of crude and refined products are currently at less than 10 per cent of pre-war levels.
Austrian Economy Minister Wolfgang Hattmannsdorfer said his country was releasing part of the emergency oil reserve and extending the national strategic gas reserve, adding: “One thing is clear: in a crisis, there must be no crisis winners at the expense of commuters and businesses.”
The German government also said it will introduce a measure to allow gas stations in Germany to raise fuel prices no more than once a day. The federal government wants to introduce this as quickly as possible, Reiche said.
In Austria, starting on Monday, price increases at gas stations will be allowed only three times a week, the country’s economy minister said.
IEA nations have released emergency stocks on five previous occasions: During the 1990-1991 Gulf War, after Hurricane Katrina in 2005, during the Libyan civil war in 2011, and twice after the Russian invasion of Ukraine.
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