G7 Releases Emergency Oil as Brent Crude Tops $100
The Group of Seven and IEA are releasing 100 million barrels of emergency oil to counter supply shocks and shipping closures in the Strait of Hormuz.
Brent crude prices exceeded $100 per barrel this week as the U.S.-Israeli war with Iran effectively closed the Strait of Hormuz and damaged critical energy infrastructure. The conflict has resulted in the loss of three billion barrels of oil and the withdrawal of one billion barrels from global inventories. Iranian state media reported the strategic waterway will remain closed until Tehran's demands are met, while fighting between Iran-backed Houthis and Yemen's Saudi-backed government further intensified supply concerns.
Russell Hardy, CEO of Vitol, warned at the Energy Intelligence Forum in London that Western countries have exhausted the inventories used to offset these disruptions. He noted the crisis has evolved from a crude shortage into a refined-products crunch and a shipping crisis with soaring freight costs. Hardy cautioned that oil could reach $200 per barrel without continued flows from the Middle East.
In response to rising diesel prices and pressure from the Donald Trump administration, the Group of Seven and the International Energy Agency agreed to release 100 million barrels of emergency crude and refined products. France separately announced a release of 10 million barrels of diesel. Despite these measures, markets remain volatile due to an unexpected drop in U.S. commercial inventories and a potential Atlantic hurricane threatening U.S. production regions.
Industry leaders warn of a prolonged recovery. Amin Nasser of Saudi Aramco stated that less than 10% of global commercial oil inventories are practically available and replenishing stocks could take up to two years. Additionally, a global shortfall of six million barrels per day of refined products persists because existing capacity cannot compensate for shuttered facilities in the Middle East Gulf.
