RIYADH: The historic decision by the International Energy Agency to release 400 million barrels of oil from strategic reserve stockpiles, the largest such move in its history, is unlikely to provide significant relief to markets, analysts say.
The agency announced the measure on March 11 as tanker traffic through the Strait of Hormuz continued to be in a state of paralysis as the US-Israel conflict with Iran continues.
The markets immediate reaction to the much-trailed decision was lukewarm, although oil did stay below the $119-a-barrel price seen on March 9, the highest level since mid-2022.
At 1:20 p.m. GMT on March 12 – about 24 hours after the announcement – Brent crude was trading at $98.26 a barrel, a daily increase of $6.28, while West Texas Intermediate was up $5.84 to $93.09 a barrel.
Ipek Ozkardeskaya, senior analyst at Swissquote, said the IEA decision was at the top end of expectations, adding: “Some say that the size of the release actually increased worries that the war could last longer. Again, the math is simple: 400 million barrels would only be enough to meet the IEA’s oil demand for roughly 9-10 days.
“After that? The IEA system is estimated to hold around 1.2 billion barrels. It goes fast. Its head, Fatih Birol, said that only the resumption of normal trade through the Strait of Hormuz would help. Well, that’s not on the menu du jour.”
The senior analyst warned that oil will not return to levels that would tame inflation expectations until geopolitical tensions materially ease.
A note from energy and commodities broker PVM also raised skeptism over the IEA's annoucement, saying in a note that that actual release “is not imminent.”
It added: “Details need to be worked out and agreed upon. An objection from even one member country could cause a delay in implementing the plan. It is worth keeping in mind that should the emergency stockpiles be used to alleviate the impact of supply and output disruptions, they will have to be replenished further down the line.”
Norbert Rucker, head of economics and next generation research at Julius Baer, struck a more optimistic note about the state of the oil market, pointing out that “meaningful infrastructure damage remains absent.”
He added: “Markets seem to be trading somewhere between our base and bear case scenarios. In the former and more likely pathway, we foresee shut-ins to reach their maximum later this week, followed by the beginning of a gradual normalization toward the end of the month.
“The assumed supply disruption would be more than compensated by the promised storage releases.
“Thus, the conflict in the Middle East should not lead to significant deficits, at least in those countries that have well-established and developed energy infrastructures.”
Rucker added that current oil prices largely reflect uncertainty, with markets pricing in a significant risk premium alongside higher logistics costs.
“Prices would need to incentivize supply growth or demand destruction only if the conflict brings meaningful and lasting infrastructure damage. Thus, the releases from strategic reserves are rightly interpreted as a calming message, a rather homeopathic tranquilizer curing the symptoms,” he said.
Oil price forecasts
Goldman Sachs raised its forecasts for oil prices in the fourth quarter of 2026, citing expectations that disruptions to crude flows through the Strait of Hormuz will persist for a longer period amid the US-Israeli war on Iran.
The US bank now expects Brent crude to reach $71 per barrel in the last three months of 2026, up from its previous forecast of $66, while it raised its estimate for West Texas Intermediate crude to $67 per barrel from $62.
Fitch Ratings also raised its 2026 Brent oil price assumption to $70 per barrel from $63 per barrel due to the effective closure of the Strait of Hormuz.
“We expect the current spike in prices to be followed by a drop to levels driven by market fundamentals once the strait reopens. However, the geopolitical risk premium is substantial, and there is uncertainty over the duration of the conflict and transit disruption. A more prolonged closure could drive our annual average oil and European gas prices higher,” the credit rating agency said in a statement.
