Member countries of the International Energy Agency (IEA) have unanimously resolved to release a historic release 400 million barrels of oil into the global market as a strategic measure to cushion crude supply disruptions caused by the escalating conflicts in the Middle East.
Top Society reports that the ongoing war involving the United States, Iran and Israel, has led to a shutdown of oil installations and blockade of the Strait of Hormuz, culminating in reduced oil supply to the international market.
After President Donald Trump declared that the war would end soon, assuaging fears of extended disruptions to global oil supply, crude oil prices dipped to $88 per barrel from $110 per barrel in the global market.
And now, the action by the IEA, described as the largest release of emergency oil stocks in history, was announced on Wednesday by the agency’s Executive Director, Fatih Birol during a live broadcast.
Making the announcement via the agency’s website, Birol said, “IEA countries will be making 400 million barrels of oil available… to the market to offset the supply lost through the effective closure of the Strait (of Hormuz).
“This is a major action aiming to alleviate the immediate impacts of the disruption in markets. But, to be clear, the most important thing for a return to stable flows of oil and (natural) gas is the resumption of transit through the Strait of Hormuz,” the official added.
In Nigeria, consumers are already feeling the impact of the supply shock caused by the conflict. Petrol prices have increased by more than 25 per cent across major cities, worsening the cost-of-living crisis many Nigerians have faced since the removal of fuel subsidy in 2023.
Fuel prices jumped from about N870 per litre to nearly N1,400 per litre in Abuja within a week after the war broke out.
After Dangote Petroleum Refinery gantry price of petrol by N100 per litre to N1, 075 per litre, independent oil marketers are yet to go below N1300 per liter pump price of petrol in their fuel stations.
In Abuja, NNPC Retail outlets, which dispensed at N1,265 per litre, dropped their rate to N1,161 per litre. AA Rano and AYM Sharfa also reduced their prices to N1,230 from N1,330 on Tuesday. However, most independent marketers retained their old prices, ranging from N1,300 to N1,355 per litre.
In Lagos, fuel stations dispensed the product at between N1,170 and N1,250 per litre, depending on location. Depot price ranged between N1, 190 and N1,220 per litre. This was as depot owners, including Matrix, Menj, NIPCO, Pinnacle and Rainoil, sold the product at N1,200, N1,180, N1,175, and N1,200 per litre respectively.
This was even as the agreed release by IEA far exceeds the 182 million barrels of oil that countries placed on the market in two tranches in 2022 when the Russia-Ukraine war was at its peak. In the same year, the United States also sold an additional 180 million barrels from its Strategic Petroleum Reserve.
Despite the unprecedented scale of the latest release, analysts believe the measure may have a limited impact in addressing what they describe as a much larger supply shock. This is as the crisis continues to have significant economic consequences globally and locally.
Birol had earlier said on Monday that IEA member countries currently hold over 1.2 billion barrels of public emergency oil stocks, with a further 600 million barrels of industry stocks held under government obligation.
