IEA orders release of 400m barrels of oil, largest in its history
Jillian Ambrose
It’s official: the International Energy Agency has ordered the largest release of government oil reserves in its history to help calm the oil price shock triggered by the US-Israeli attacks on Iran.
The world’s energy watchdog said its 32 members had agreed unanimously to release about 400m barrels of emergency crude, a third of the group’s total government stockpiles and more than double the IEA’s previous biggest release.
The emergency intervention far outstrips the 2022 release of 182m barrels of oil by IEA countries after Russia’s full-scale invasion of Ukraine
The body’s executive director, Fatih Birol, sad: “Oil markets are global so the response to major disruptions needs to be global too. Energy security is the founding mandate of the IEA, and I am pleased that IEA members are showing strong solidarity in taking decisive action together.”
The IEA said the emergency stocks would be made available to the global market, which has lost around 15m barrels of crude a day because of a block on trade via the strait of Hormuz, over a timeframe appropriate to the national circumstances of each member, bolstered by supplementary emergency measures from some countries.
Japan’s prime minister, Sanae Takaichi, said the country, which relies on the Strait of Hormuz for about 70% of its oil imports, would “act first” to release around 80m barrels from its private and national oil reserves from 18 March to help calm global oil markets.
Germany’s economy minister Katherina Reiche told reporters in Berlin that the German government would release the equivalent of 19.51m barrels of crude as part of the IEA’s historic release of crude.
We will comply with this request and contribute our share, because Germany stands behind the IEA’s most important principle: mutual solidarity.
The historic market intervention will deliver the equivalent of around 26 days of crude typically delivered via the vital oil trade artery which has seen deliveries ground to a halt by the threat of attack from the IRGC. 13 ships have come under attack in the region since the war began, including three on Wednesday as Iran’s military warned that the world should be prepared for oil to hit $200 a barrel.
Key events
Closing summary
With that, we are wrapping up for the day.
Brent crude oil prices have risen by 4.4% to $91.7 a barrel, despite the world’s energy watchdog, the International Energy Agency, ordering a record release of 400m of barrels of oil, its biggest ever release.
Our other main stories:
Thank you for reading. We’ll be back tomorrow. Take care! – JK
UK to release 13.5m barrels from emergency oil stocks as part of IEA action
Jillian Ambrose
The UK has promised to release 13.5m barrels from its emergency oil stocks as part of the International Energy Agency’s largest ever release of crude reserves to help stabilise the global market.
The government did not give a time frame for the release of these stocks to the market, which has recorded some of the steepest hikes in its history since the US-Israeli strikes on Iran ignited war in the Middle East almost 12 days ago.
The UK’s emergency oil stocks, which are held by companies within the oil and gas industry, are currently stored near refineries, oil terminals, power stations, and at offshore fields in the North Sea. But about 15% of the stockpile is held in overseas countries, including the Netherlands, Belgium and Germany.
Ed Miliband, the energy secretary, said:
With this action, the UK is playing our part in working with our international allies to address the disruption in oil markets. The UK has strong and diverse energy supplies, and the price cap plays an important role in protecting energy bills until July.”
The way to protect families and businesses in the long run is to get off our dependency on global fossil fuel markets, and onto clean homegrown power which we control.
Analysis: Can the IEA put a lid on the price per barrel by releasing oil stockpiles?
When the global economy was still in the grip of the devastating 1970s oil crises, exposing the chokehold exerted by a few important oil states, the International Energy Agency (IEA) was created, in the hope of limiting future shocks.
Almost half a century on, the IEA’s 32 members have drawn up plans to hit the emergency button, for only the fifth time in its history.
On Wednesday, the IEA said 400m barrels of emergency crude, a third of the group’s total government stockpiles, would be released to help calm the oil price shock triggered by the US-Israel war on Iran. It is the biggest release of oil reserves in its history.
The cost of a barrel of crude oil quadrupled between October 1973 and January 1974, after members of the Opec cartel cut production; then fell back, before nearly trebling again in 1979, after the Iranian revolution.
Read our full analysis here:
Heating oil suppliers are “blatantly profiteering” from the conflict in the Middle East by doubling the price they charge households, an MP has told the competition watchdog.
Harriet Cross, a Conservative MP for the Scottish seat of Gordon and Buchan, called on the Competition and Markets Authority (CMA) to investigate sudden price hikes.
She has also written to the energy secretary, Ed Miliband, asking the government to support households struggling with unexpected increases in their energy bills.
An estimated 1.7m households in the UK, mostly in rural areas that are not connected to the mains gas network, rely on heating oil to warm their homes, cook food and provide hot water.
As reported earlier, US inflation stayed flat at 2.4% in February, according to government data released Wednesday that provides a snapshot of the US economy before it was thrown into a tailspin by the US-Israel conflict with Iran.
The levelling comes after prices swung last year, reaching a four-year low in April before shooting back up in September. In late fall, inflation crept down again, reaching 2.4% in January.
Core inflation, which doesn’t include the volatile energy and food industries, was 2.5%. The largest price increases were seen in shelter, medical care service and utilities.
Some sectors that rely heavily on imports showed clear signs of impact from Trump’s tariffs. Coffee prices were up 18.4% compared to last year. Prices for canned fruit and vegetables, which use steel and aluminum that is tariffed at 50%, were 6.2% higher, as was the price of furniture and bedding by 4.2%.
Gas prices were actually down 5.2% for the year, a stark contrast to the skyrocketing prices that’s been seen since the start of the US-Israel war on Iran.
IEA orders release of 400m barrels of oil, largest in its history
Jillian Ambrose
It’s official: the International Energy Agency has ordered the largest release of government oil reserves in its history to help calm the oil price shock triggered by the US-Israeli attacks on Iran.
The world’s energy watchdog said its 32 members had agreed unanimously to release about 400m barrels of emergency crude, a third of the group’s total government stockpiles and more than double the IEA’s previous biggest release.
The emergency intervention far outstrips the 2022 release of 182m barrels of oil by IEA countries after Russia’s full-scale invasion of Ukraine
The body’s executive director, Fatih Birol, sad: “Oil markets are global so the response to major disruptions needs to be global too. Energy security is the founding mandate of the IEA, and I am pleased that IEA members are showing strong solidarity in taking decisive action together.”
The IEA said the emergency stocks would be made available to the global market, which has lost around 15m barrels of crude a day because of a block on trade via the strait of Hormuz, over a timeframe appropriate to the national circumstances of each member, bolstered by supplementary emergency measures from some countries.
Japan’s prime minister, Sanae Takaichi, said the country, which relies on the Strait of Hormuz for about 70% of its oil imports, would “act first” to release around 80m barrels from its private and national oil reserves from 18 March to help calm global oil markets.
Germany’s economy minister Katherina Reiche told reporters in Berlin that the German government would release the equivalent of 19.51m barrels of crude as part of the IEA’s historic release of crude.
We will comply with this request and contribute our share, because Germany stands behind the IEA’s most important principle: mutual solidarity.
The historic market intervention will deliver the equivalent of around 26 days of crude typically delivered via the vital oil trade artery which has seen deliveries ground to a halt by the threat of attack from the IRGC. 13 ships have come under attack in the region since the war began, including three on Wednesday as Iran’s military warned that the world should be prepared for oil to hit $200 a barrel.
Standard Chartered has begun evacuating staff from offices in Dubai, Reuters reported, citing two sources, as lenders step up precautionary measures following an Iranian warning that Tehran will target US and Israeli banks in the region.
The London-based bank has a large presence in the United Arab Emirates and offices, including in the Dubai International Financial Centre (DIFC), a financial hub home to large international banks and law firms.
Iran will target economic and banking interests linked to the US and Israel in the region, after an attack on an Iranian bank, a spokesperson for Tehran’s Khatam al-Anbiya military command headquarters said today.
Many staff at foreign and local businesses have been working from home following US and Israeli attacks on Iran, which prompted Tehran to fire missiles at targets across the Middle East, causing damage and deaths across the Gulf and travel chaos.
Following the creation of the DIFC in 2004 the centre now hosts more than 290 banks, 102 hedge funds, 500 wealth management firms and 1,289 family-related entities (as of December).
UK competition watchdog examines concerns about heating oil
The UK’s competition watchdog is examining heating oil amid concerns about rising prices due to the Iran war, which has driven wholesale prices for key commodities such as oil sharply higher.
Brent crude, the global benchmark, is up 4.5% up at $91.76 a barrel.
Inevitably, this is having an impact on the prices consumers pay for fuel, in particular the cost of heating oil, which powers around 1.5m UK homes, predominantly in rural areas, and is the main source of fuel for heating in Northern Ireland, the Competition and Markets Authority (CMA) said.
It has heard a number of concerning reports from consumers who rely on heating oil about their experiences with retailers in recent days, and said it would look into it.
An initial review of complaints has identified 2 main issues, which the CMA will be probing further:
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existing orders for heating oil being cancelled, and customers then being offered new quotes at significantly increased prices
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price increases for automated deliveries (triggered when the fuel in a tank drops to a certain level)
Sarah Cardell, chief executive of the CMA, said:
We know many households are worried about rising prices as global events push up wholesale oil costs. It’s inevitable that some prices will rise, but they should reflect genuine cost pressures.
We’ve heard troubling reports from heating oil customers about cancelled orders and sudden price increases – and are moving quickly to get to the bottom of these concerns. As always, we stand by consumers and will make sure they are treated fairly.”
The CMA, as a matter of urgency, is writing to a number of firms – both direct suppliers and intermediaries – to seek further information about their practices.
US inflation stays at 2.4%, as expected
US inflation stayed at an annual rate of 2.4% last month, as expected.
The dollar held on to gains of 0.2% against a basket of major currencies after the data.
ECB policymakers hint at rate hike in coming months
Phillip Inman
European Central Bank policymakers have put the 21-member euro-bloc on notice that they could increase borrowing costs in the next few months to prevent the conflict in Iran from pushing up inflation.
Governing council member Peter Kazimir said the rising cost of oil and its impact on inflation risked forcing the ECB to raise interest rates in the summer.
He told Bloomberg in an interview that while the ECB was in a “good place” and there’s no need to act at next week’s meeting, he was worried that businesses and workers, still smarting from the post Ukraine inflation spike, would move quickly to recover losses through higher prices and improved wages.
The balance of risks regarding inflation has clearly shifted to the upside. We can forget about all the discussions about an inflation undershoot.
Andrzej Szczepaniak, senior European conomist at Nomura International, said Kazimir would be considered a hawk on the ECB and always prone to tighten monetary policy. However, his comments revealed a growing concern among ECB members that they should avoid being caught asleep at the wheel.
Another hawk, Joachim Nagel, the president of the Bundesbank, said:
We must be very vigilant.
If it becomes apparent that the current energy price increases will translate into broad consumer price inflation in the medium term, the governing council of the ECB will act decisively in a timely manner.
These comments followed those of the boss, ECB president Christine Lagarde, on Tuesday. She said:
I can assure you … that we will do everything necessary to keep inflation under control and to ensure that the French, the Europeans, do not experience inflationary increases like those we saw in 2022 and 2023.
Some central bankers have warned against reacting to the Iran war by raising interest rates, saying the war will hit economic growth and higher borrowing costs would only compound a deteriorating situation. Bank of England monetary policy committee member Alan Taylor argued this point last week, soon after the US and and Isreali attacks on Iran began.
The chancellor has also warned oil companies about price gouging at the pumps. She told MPs that some petrol stations were charging almost 180p a litre.
The government’s fuel finder service shows 20 BP-branded garages at close to £1.80 a litre (£1.76) in the last couple of days, while other petrol stations charged as little as £1.27.
Reeves told the Treasury committee:
When oil and gas prices fall, they’re not always passed on to consumers.
The government is working with the Competition and Markets Authority on “any price gouging” in heating oil as households have seen prices double, the chancellor said, adding that she would meet the competition watchdog and petrol retailers on Thursday.
Richard Partington
Back to Rachel Reeves, who has refused to rule out a fuel duty rise.
Pressed by Tory MPs on the Treasury committee whether she would push ahead with a planned 5p rise in fuel duty in September, she said:
Governments always keep all taxes under review.
It is much too early when those changes are not due to come into effect until September to guess where petrol prices will be then.
But I am very loathe to spend government money on something the market should be doing itself. And that’s why greater competition and greater transparency about pricing is so important.
I would rather we had a properly functioning market where customers have decent information about prices at different petrol forecourts, rather than subsidising the money which often goes to the retailer.
IEA plans to release 400m barrels of oil, Reuters says
The International Energy Agency plans to release 400m barrels of oil, the largest such move in its history, to curb the surge in crude prices, Reuters is reporting, citing sources.
We are expecting a statement at 1pm GMT, ahead of a meeting of G7 leaders chaired by France.
One of the sources said the release would be spaced over at least two months, while Spain’s energy minister said countries would have up to 90 days to release that volume.
In 2022, IEA member countries released 182.7m barrels over two months, which was then the largest in its history, when Russia launched its full-scale invasion of Ukraine.
Sara Aagesen, Spain’s energy minister, said:
I would say it is the largest proposal in the history of the International Energy Agency.
During the war in Ukraine, they were talking about releasing around 182m barrels, and now it’s an amount that is more than double their proposal.
Western economies coordinate their strategic oil stockpiles through the IEA, which was formed after the 1970s oil crisis.
Thailand’s national airline is hiking its fares, while the Dutch airline KLM has cancelled all flights to Dubai until 28 March.
Thai Airways will increase fares by 10% to 15% to cope with rising fuel prices and supply uncertainties, an executive said today. Rath Rauksamrauat, director of corporate finance, told investors.
Fare increases are fuel surcharges and are still within the price ceiling. If fuel prices increases further, we can ask the regulator to raise this ceiling.
The airline is receiving more passengers as other carriers divert from Middle East airspace, he said.
KLM, the Dutch arm of Air France-KLM, has canceled all flights to Dubai until March 28 due to the war in the Middle East, it announced today.
Due to the ongoing geopolitical unrest in the Middle East, KLM has decided to cancel all flights to Dubai through March 28th.
KLM added that it remained available to repatriate stranded travellers, a process handled through the Dutch Ministry of Foreign Affairs.
Reeves has criticised heating oil companies, some of which are only selling in large quantities – while consumers want to buy smaller amounts to top up their tank after the surge in crude oil prices.
Some companies are saying that you can only buy a larger quantity. They won’t sell in small quantities, whereas at the moment, many people want to top up a little bit, at the higher price, but not fill up their whole tank. So we’re looking at some of those market practices which aren’t necessarily about price, but they’re also about quantity. But we’ve been using the last few days to properly understand what is happening, in that, market, and after the meeting today, we will make decisions on what further action, is, is needed.
I would say to businesses, providing heating oil, that it is not right to say that you will only sell in large quantities at the moment. That’s not fair on customers. And I would encourage consumers to push back and to shop around in circumstances where they’re being told they can only buy a large quantity at a very high price.
