A proposed record release of emergency strategic oil reserves  from the International Energy Agency (IEA) could offer temporary relief to global markets if Middle Eastern supply disruptions deepen, but it will not prevent prices from rising again.

If the Strait of Hormuz remains closed for a prolonged period the oil will be used, but the supplies will not rematerialise. The same panic that marred “wild Monday" will simply happen again, according to Hamad Hussain, climate and commodities economist in a note for at Capital Economics.

Media reports suggest that members of the IEA are preparing the largest coordinated drawdown of strategic oil reserves on record, potentially releasing 300mn to 400mn barrels to stabilise markets after the effective closure of the critical shipping route. That would exceed the previous record release of 182mn barrels organised by the IEA in 2022, Hussain notes, excluding a further 90mn barrels that the United States released independently at the time.

IEA member governments collectively hold about 1.2bn barrels of emergency oil stocks, most of them stored domestically, Hussain says, with by far the most in the US, followed by Japan, Germany, Canada and South Korea in that order.

The US Strategic Petroleum Reserve (SPR) accounts for roughly a third of the total and consists entirely of crude oil, while European reserves are more diversified and include significant volumes of refined products. “There could be some relief in both crude and product markets from IEA action,” Hussain says, noting that an additional 600mn barrels stored commercially may also be available under government obligations.

On the surface, the size of the release – if it happens - could ease immediate supply concerns. Hussain notes that oil prices fell below $100 per barrel after reports emerged that the IEA was considering tapping its reserves, but traders were unsettled later in the day when three more tankers were hit by rockets, bringing the total to 17 since Operation Epic Fury started.

A coordinated release of 300mn to 400mn barrels could even offset supply losses if the conflict proves short-lived. In a relatively benign scenario where flows from the Gulf resume within a month, around 350mn barrels of supply could be lost compared with pre-conflict levels.

But Hussain warns that the effectiveness of emergency reserves is limited if the disruption persists. A longer conflict that damages Gulf energy infrastructure could ultimately remove more potential supply than IEA members hold in emergency stocks.

There are also practical constraints on how quickly strategic reserves can reach the market. Hussain estimates that losing 350mn barrels over one month would equate to a supply disruption of more than 10mn barrels per day, far exceeding the rate at which emergency reserves have historically been deployed.

“No more than 2.5mn barrels per day has ever been released from IEA stockpiles,” he says, adding that even 5mn b/d would be difficult to sustain without interfering with private supply flows in pipelines.

Strategic reserves were designed to cushion shocks rather than fully replace lost supply. “This reinforces the point that opening the Strait of Hormuz is key to sustainably bring energy prices down,” he says.

The actions of China, which is not a member of the IEA, could also prove decisive in shaping global oil markets. Hussain estimates that China has accumulated 1.1bn to 1.4bn barrels of oil across its strategic and commercial stockpiles after years of building storage facilities and purchasing reserves.

Beijing has only tapped those reserves once before, releasing 7.4mn barrels in 2021 as a test of its oil reserve system rather than as a direct attempt to curb prices. Whether policymakers will deploy them more aggressively this time remains uncertain.

Even without a formal release, China’s behaviour could influence markets. Hussain notes that Chinese trade and activity data suggest the country tends to halt excess crude purchases when prices remain around current levels for an extended period. A slowdown in stockpiling alone could ease pressure on global demand and help moderate prices.