The G-7 group of the world’s most advanced economies support in principle the idea to release strategic petroleum reserves to calm the market as supply from the Middle East is choked at the Strait of Hormuz.
“Working alongside the IEA, we are vigilantly monitoring energy market trends and are coordinating within the G-7 and with our international partners, IEA member countries, and beyond,” G-7 energy ministers said in a statement emailed to Bloomberg on Wednesday.
The ministers noted they support in principle the “implementation of proactive measures to address the situation, including the use of strategic reserves.”
On Tuesday, the International Energy Agency hosted a meeting of G-7 Energy Ministers in Paris to discuss the situation in the Middle East and potentially take measures to mitigate the fallout on the global oil market.
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IEA Executive Director Fatih Birol said that the group discussed all available options to stabilize the market, including the possible release of emergency stockpiles held by IEA member countries
According to the agency, member governments, mostly developed economies, collectively hold more than 1.2 billion barrels of public emergency oil stocks, in addition to roughly 600 million barrels of industry inventories maintained under government obligations.
As reports emerged that the IEA proposed the largest-ever release of emergency stocks, oil prices tanked on Tuesday to settle below $90 per barrel Brent, also helped by the market apparently believing U.S. President Donald Trump’s comments that the war in Iran “is very complete, pretty much”.
On Wednesday, however, oil prices started rising again by 2% in Asian trade, as the market grapples with estimates how much of the Middle East’s supply would be choked in the Gulf and for how long.
The largest oil producers in the Middle East Gulf have deepened production cuts and are already lowering output by a combined more than 5 million barrels per day (bpd) as the de facto halt to tanker traffic in the Strait of Hormuz has started to affect upstream production.
By Tsvetana Paraskova for Oilprice.com
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