Germany and Austria to release reserve oil in attempt to temper price spikes

A thick plume of smoke rises from an oil storage facility hit by a US-Israeli strike in Tehran, Iran. Picture: Vahid Salemi/AP Photo.

Germany and Austria have announced that they will release part of their oil reserves following a call from the International Energy Agency.

The agency asked its members to release 400m barrels to help temper energy price spikes due to the conflict in the Middle East.

Japan also said it will release some of its reserves, starting on Monday.

The largest-ever previous collective release of emergency stocks by International Energy Agency (IEA) member countries was 182.7 million barrels in the wake of the energy shock prompted by Russia’s full-scale invasion of Ukraine in 2022.

IEA members currently hold more than 1.2bn barrels of public emergency oil stocks, with a further 600m barrels of industry stocks held under government obligation.

In response to US and Israel strikes, Iran has attacked commercial ships across the Persian Gulf, escalating a campaign of squeezing the oil-rich region as global energy concerns mount.

Iran has effectively stopped cargo traffic in the narrow Hormuz Strait, through which about a fifth of all oil is shipped from the Persian Gulf towards the Indian Ocean.

It has also targeted oil fields and refineries in Gulf Arab nations, aiming at generating enough global economic pain to pressure the United States and Israel to end their strikes.

G7 energy ministers on Tuesday had announced they supported, in principle, “the implementation of proactive measures to address the situation, including the use of strategic reserves”.

According to the IEA, export volumes of crude and refined products are currently at less than 10% of pre-war levels.