In the second week of the Iran war — with the Strait of Hormuz effectively closed and some 20% of the world’s oil supply cut off — the International Energy Agency announced the largest coordinated release of strategic oil reserves in history. Thirty-two countries will sell a combined 412 million barrels into the global market over four months, beginning in late March 2026.
Strategic oil stocks are not new. The idea goes back to the early 20th century when the US Navy moved from coal to oil and Congress set aside petroleum-rich areas to be tapped in wartime. The modern system of national strategic reserves emerged after the 1973–74 oil crisis, when an OPEC export cutoff sent prices soaring and exposed vulnerabilities in global supply. The IEA was founded to help coordinate responses to such shocks and to encourage member countries to hold enough stock to replace at least 90 days of imports; some countries, like Japan, maintain much longer cover.
Today, IEA members together hold roughly 1.2 billion barrels of government stockpiles, with an estimated additional 600 million barrels held by industry. The United States’ expected contribution of 172 million barrels is nearly half of the current planned release. The US Strategic Petroleum Reserve is stored in salt dome caverns along the Gulf Coast; it once had a statutory capacity near 1 billion barrels and a working maximum of about 713.5 million, but in mid‑March 2026 the reserve stood at about 415 million barrels — roughly 60% full and far below its potential capacity.
Strategic reserves serve two basic purposes: to replace some portion of disrupted supply and to moderate the spike in prices that might follow a sudden shortage. Releases are short-term measures that add a fixed number of barrels to the market for a few months. In this instance, the IEA release might supply roughly 3 to 4 million barrels per day — meaningful but far short of the roughly 10 million barrels per day now constrained by the closed Strait of Hormuz and other disruptions.
Why might a temporary release matter anyway? Oil prices are heavily influenced by futures markets, where contracts for delivery one to three months ahead set expectations. If traders know additional barrels will be available in the near term, futures prices tend to be lower than they otherwise would be, which can prevent an immediate, extreme spike and reduce the chance that high prices persist. That’s the mechanism by which strategic releases moderate price surges even when they cannot fully replace lost physical volumes.
The United States has used the SPR several times. In 2022, for example, the Biden administration released 180 million barrels in response to price spikes after Russia’s invasion of Ukraine. A US Treasury analysis concluded that release reduced market volatility and lowered pump prices by an estimated 30 to 40 cents per gallon. Critics have long argued that releases can be used for political reasons rather than strictly economic ones; presidents of both parties have faced such accusations.
The current US release of 172 million barrels will reduce the SPR to about 243 million barrels, roughly 34% of its maximum capacity — the lowest level since the early 1980s. The administration has indicated plans to add about 200 million barrels later in 2026, which would restore the reserve to roughly its pre‑release level but not to historical capacity.
A major coordinated release is a tool to blunt immediate shock and buy time, but it leaves participating countries more exposed if disruptions continue or deepen. Further attacks on Gulf production, facilities, or shipping could prompt additional calls for releases from remaining stocks. Large holders such as China, which has built up massive commercial stocks estimated well above those of any single Western country, illustrate another strategic approach: deep, long-term stockpiling to insulate against import disruptions.
The Iran war has underscored that strategic reserves remain relevant. They cannot fully substitute for lost daily production in the event of a prolonged supply cutoff, but they can temper panic, steady futures markets, and ease price pressure in the short run. The tradeoff is obvious: using the reserves reduces a nation’s buffer against future shocks, so decisions to release must weigh near-term market relief against longer-term vulnerability.
Scott L. Montgomery is a lecturer in international studies, University of Washington.
This article is republished from The Conversation under a Creative Commons license.
