Summary of this article
Crude oil prices surged more than 10 per cent on March 12
The spike came even as IEA agreed to release a record 400 million barrels of oil from their reserves
This release is more than double what IEA countries had released following Ukraine-Russia war
Crude Oil Price Today: Crude oil prices surged more than 10 per cent on March 12, extending gains from the previous session, as record release of emergency oil by member countries of International Energy Agency (IEA) failed to calm investor nerves.
Brent crude futures climbed as much as 10.38 per cent to $101.53 per barrel. US benchmark West Texas Intermediate (WTI) crude also jumped nearly 10 per cent to $95.96 per barrel.
The spike in prices came even as several countries agreed to release oil from their emergency reserves in an attempt to ease supply shortages and cool rising prices. All 32 member countries, including the United States (US), agreed to release a record 400 million barrels of oil from their emergency reserves to increase supply in the market.
This is the largest release in IEA history, more than double the previous record made in response to Russia’s 2022 invasion of Ukraine.
“The oil market challenges we are facing are unprecedented in scale, therefore 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 prices have been scaling new highs due to the ongoing US-Israeli war in Iran. The war has disrupted oil exports through the Strait of Hormuz, an important shipping route that carries about one fourth of global oil supplies transported by sea. Some oil producer in the West Asian region have slowed or nearly stopped production, which has intensified supply shortage concerns. As a result, crude oil prices are now around 40 per cent higher than the levels seen before the Iran war began.
The IEA was created in 1974 after the global oil crisis triggered by the Arab oil embargo. The agency was formed to help countries work together to protect energy supplies during major disruptions.
Since then, the IEA has used its coordinated emergency oil release system only six times. These include during the Gulf War, after Hurricane Katrina disrupted oil production in the US, during the Libyan Civil War, and twice in 2022 following the Russian invasion of Ukraine.
“The emergency stocks will be made available to the market over a timeframe that is appropriate to the national circumstances of each Member country and will be supplemented by additional emergency measures by some countries,” IEA said in a release.
Members of the IEA hold more than 1.2 billion barrels of emergency oil reserves. Further, around 600 million barrels of oil are stored by companies under government obligation, according to the agency.
