IEA Releases Emergency Oil Reserves Amid Middle East Conflict

The International Energy Agency (IEA) has authorized the release of 400 million barrels of oil from strategic reserves, a move aimed at stabilizing global oil markets disrupted by escalating conflict in the Middle East. This action, agreed upon by member countries on March 11, 2026, represents the largest release in the IEA’s history, exceeding even the response to the 2022 Ukraine crisis. Latvia, along with Estonia and Lithuania, is prepared to contribute to this effort.

The Crisis and its Impact on Oil Supply

The current crisis stems from a series of joint air strikes by the United States and Israel against targets in Iran on February 28, 2026. Iran responded by effectively blocking the Strait of Hormuz, a critical waterway through which approximately 20 million barrels of oil and petroleum products flowed daily, representing roughly a fifth of global supply. This disruption has created the largest supply shock in the history of the modern oil market Financial Content.

Prior to the conflict, oil prices were below $70 per barrel. However, as of March 12, 2026, Brent crude futures had risen nearly 40% since the start of hostilities, reaching almost $120 per barrel, while Dutch TTF, the European benchmark for natural gas, increased by almost 60% IEA. Markets for oil products, particularly diesel and jet fuel, have likewise been significantly affected.

The IEA’s Response and Reserve Release

The IEA’s decision to release 400 million barrels – one-third of total government-controlled reserves held by its 32 member nations – aims to mitigate the impact of the supply disruption and prevent a systemic inflationary collapse Financial Content.

The release will be staged, with IEA members in Asia and Oceania making stockpiles available immediately, while those in the Americas and Europe will begin releasing stocks from the end of March IEA.

Baltic States’ Participation

Latvia, Estonia, and Lithuania have jointly affirmed their readiness to utilize oil reserves as part of the IEA’s collective action Baltic Times. National decisions regarding the size, timing, and parameters of the release are being finalized to maximize the positive impact on both the market and consumers, and to effectively manage rising oil prices Baltic Times. Latvian officials have indicated a focus on reducing retail fuel prices.

Looking Ahead

While the IEA’s intervention has provided some cooling to oil prices, the market remains volatile. The IEA emphasizes that the resumption of regular vessel traffic through the Strait of Hormuz is the most critical factor for ensuring stable oil flows IEA. Adequate insurance mechanisms and physical safeguards are deemed essential to facilitate this resumption. This is the sixth time IEA members have released oil from strategic reserves, with previous instances occurring in 1991, 2005, 2011, and twice in 2022.