The International Energy Agency is now tapping its members' oil reserves in an effort to counter the disruption in energy markets due to the war in the Middle East.
"IEA countries have unanimously decided to launch the largest-ever release of emergency oil stocks in our agency's history," said IEA executive director Dr. Fatih Birol.
The group, which represents 32 member countries and includes the U.S., will make 400 million barrels of oil available. 172 million of the barrels will come from the U.S. Strategic Petroleum Reserve.
"We’ll do that and then we’ll fill it up," President Donald Trump said in an interview with WKRC Local 12 in Cincinnati about the release. “Right now we’ll reduce it a little bit, and that brings the prices down.”
The total release is about 20 days' worth of the amount of oil that normally passes through the Strait of Hormuz.
It's the agency's largest-ever oil release, but its effectiveness in reassuring energy markets will depend on the pace at which that oil can be delivered, according to Gas Buddy's Patrick de Haan.
"The 400 million may be attention grabbing, but it's all in the rate of how quickly this oil can be dispersed into the market. Is this gonna take a week, a month, a day?" He asked.
"The Strait of Hormuz blockage is 20 million of barrels of oil per day. There needs to be an equivalent so that we know to what degree is this offsetting the impact of the closure of the Strait of Hormuz."
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The standstill in oil passing through the strait has caused the price of crude oil to soar since the start of the war, ad the price of gas to jump nearly 20 percent in the U.S.
A gallon of gas is up nearly 60 cents from before the war, and this new release doesn't guarantee that will come down.
Meanwhile on Wednesday, an Iranian drone strike set oil storage facilities on fire in Oman and Iran struck at least one commercial cargo vessel in the Strait of Hormuz.
"I can't cleanly say that, you know, this 400 million barrels is going to reduce prices x amount because markets are not frozen to watching just one factor. It's many factors and it depends on what Iran may do after this," de Haan said.
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