The 32 member countries of the International Energy Agency (IEA), including Australia, have unanimously agreed to release 400 million barrels of emergency oil reserves to the market – its largest ever release.
The release is made in an attempt to stabilise international energy markets, which are feeling the effects of the US–Israel war with Iran, with the price of crude oil and refined oil products shooting through the roof in the early days of the conflict. The international price of LNG also saw a notable lift.
“The oil market challenges we are facing are unprecedented in scale, therefore I am very glad that IEA member countries have responded with an emergency collective action of unprecedented size,” IEA Executive Director Fatih Birol said.
Most pertinent to this market instability is Iran’s decision to impede oil flow through the Strait of Hormuz, a global energy trade route. In 2025, an average of 20 million barrels per day of crude oil and oil products – roughly 25 per cent of global seaborne oil trade – travelled through the strait.
As the war unfolds, Iran has said it will not allow a single litre of oil heading for the US, Israel or its allies to pass through the Strait of Hormuz. In the last 24 hours, three cargo vessels travelling through the strait have been struck by projectiles, with Iran also reportedly laying mines in the area. The nation is also targeting oil fields and refineries in Gulf Arab nations with drone and missile strikes.
Israel has similarly been targeting oil infrastructure in Iran, destroying two oil refineries and two oil storage facilities.
Saudi Aramco CEO Amin Nasser has warned of a severe chain reaction in the global economy if the disruptions continue, with shipping, insurance, aviation, agriculture, and many other industries feeling the consequences.
“There would be catastrophic consequences for the world’s oil markets the longer the disruption goes on, and the more drastic the consequences for the global economy,” he said.
The IEA’s emergency stocks will be made available to the market over a timeframe that is appropriate to the national circumstances of each member country and will be supplemented by additional emergency measures by some countries.
The situation in Australia
Australia imports roughly 90 per cent of its liquid fuel, mostly from Asia – which in turn sources much of its crude oil from the Middle East. Fuel prices in Australia are also set by petrol retailers, which raise their prices in response to shifts in the global market – a practice that has been criticised as price-gouging. Last week, the Australian Institute of Petroleum reported a 17-cent rise in the average price of fuel. In some regional areas, the price of fuel peaked at $3.40 per litre.