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The International Energy Agency is preparing the largest release of strategic oil reserves in its history, in a bid to quell the turmoil in energy markets unleashed by the Middle East war.
The agency on Tuesday told officials from its 32 member countries that it recommended a larger stock release than in 2022, when it acted in response to Russia’s full-scale invasion of Ukraine, according to a person familiar with the matter.
“We need to send a very clear message,” French finance minister Roland Lescure said on Wednesday on BFMTV.
“If we cannot reopen the Strait of Hormuz, we will replace it with other oil coming from elsewhere and circulating around the world.”
Tankers have largely stopped sailing through the Strait of Hormuz, the narrow waterway through which about 20 per cent of the world’s oil and natural gas normally flows, due to threats to shipping from Iran.
The IEA proposal comes after G7 finance ministers said on Monday they were ready to tap stocks of crude oil, petrol and diesel to protect the world economy.
Oil prices rose 2 per cent early on Wednesday after two days of wild swings that sent Brent crude, the international benchmark, to almost $120 a barrel before it fell back after the FT first reported that the release of IEA reserves was being considered.
The IEA’s rare move would underline the threat that the energy shock caused by war in the Middle East poses to the global economy.
In a statement on Wednesday, G7 countries said that in principle they supported the “implementation of proactive measures to address the situation, including the use of strategic reserves”.
If no member states object to the IEA’s plan it could be announced on Wednesday afternoon, the person said.
Under the IEA programme, member countries hold about 1.2bn barrels in strategic reserves that can be tapped in an emergency, though this has been done only five times since the agency was founded following the Arab oil crises of the 1970s.
The agency released 182mn barrels in two separate moves in 2022 after Russia invaded Ukraine.
French President Emmanuel Macron will hold talks with G7 leaders later on Wednesday to discuss the “economic consequences of the war in the Middle East, the energy situation as well as the measures to tackle them,” the Élysée said on Tuesday.
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