The IEA Releases 400 Million Barrels of Oil in One Go! The Largest Market Rescue in History – Can It Stop Soaring Oil Prices?
The IEA Releases 400 Million Barrels of Oil in One Go! The Largest Market Rescue in History – Can It Stop Soaring Oil Prices?
Yesterday, the International Energy Agency (IEA) did something big.
32 member countries unanimously agreed to release 400 million barrels of oil reserves. What does this mean? To put it in perspective, when the Russia-Ukraine conflict first broke out in 2022, the combined reserves released only 182 million barrels. This is more than double that, making it the largest “collective market rescue” in the IEA’s history.
Upon hearing the news, many people’s first reaction was: surely oil prices will finally fall?
But reality has been a bit of a slap in the face. After the announcement, oil prices only briefly dipped before rebounding above $90. At times, Brent crude even surged to $120.
Why couldn’t such a significant positive development suppress oil prices? Is this 400 million barrels of oil a timely relief or just a drop in the ocean? Let’s break it down today.
01 400 Million Barrels Sounds Like a Lot, But It’s Only Enough for 25 Days
Let’s do the math.
The 400 million barrels released this time sounds like an astronomical figure. But what’s the context? The Strait of Hormuz is almost completely blocked.
Since the escalation of the Middle East situation at the end of February, commercial traffic on this most important global oil artery has almost come to a standstill. Citigroup estimates that the daily loss in oil supply is between 11 million and 16 million barrels.
What does that mean? It means that much less oil is being lost globally every day.
If all 400 million barrels of reserves were used, divided by the daily loss of 15 million barrels, it would only fill a 25-day gap. JPMorgan analysts have calculated it even more precisely: the combined onshore and offshore storage capacity of Gulf oil-producing countries can only absorb about 25 days of surplus production, after which a complete shutdown will be forced.
One analyst put it more bluntly: it’s like using a water cannon to put out a fire caused by a rocket launcher.
And there’s an even more crucial issue: speed.
The theoretical maximum release capacity of the U.S. Strategic Petroleum Reserve (SPR) is 4.4 million barrels per day, but this is a theoretical value. In actual operation in 2022, the peak never exceeded 1.1 million barrels per day. Moreover, it takes 13 days from the president’s order to the oil actually flowing into the market.
How can market panic be contained during these 13 days?
IEA Administrator Birol himself admitted that releasing reserves can only “mitigate the direct impact,” and the real solution is the reopening of the Strait of Hormuz. As long as the strait remains blocked, these 400 million barrels are merely a “delaying tactic,” buying time, not a solution.
02 Every Dollar Increase in Oil Prices Shrinks Your Wallet
Many readers might ask: What does it matter to me whether oil prices rise or fall? I don’t drive.
It matters a lot. Crude oil is the starting point of everything; when its price rises, everything else follows suit. This storm has already reached you along the supply chain.
First stop: Airfares are going to be more expensive again.
The aviation industry is most sensitive to oil prices. Aviation fuel prices have surged from $85-90 per barrel before the conflict to $150-200 per barrel. Fuel costs account for 34%-36% of the total costs for the three major airlines (according to 2025 financial reports). The rise in oil prices is unbearable for airlines.
Hong Kong Airlines has already announced an increase in fuel surcharges starting March 12th, with short-haul routes rising from HK$162 to HK$212 and long-haul routes from HK$589 to HK$739. Air New Zealand followed suit, raising domestic economy class fares by NZ$10 one-way, short-haul international routes by NZ$20, and long-haul routes by NZ$90.
Domestic airlines Air China, China Eastern, and China Southern have their fuel surcharge adjustment window open on April 5th, making price increases almost certain.
Secondly, express delivery and food delivery prices may also adjust.
Fuel costs constitute a significant portion of logistics costs. Sustained high oil prices and rising transportation costs will ultimately be reflected in express delivery or delivery fees.
The third stop: Hidden price increases in daily necessities.
The clothes you wear (synthetic fibers), the plastic bags you use, your car tires, even the flooring in your home—all are made from chemical raw materials refined from crude oil. Fertilizers and pesticides are also mostly petroleum derivatives. When fertilizer prices rise, the cost of agricultural products increases, ultimately affecting our food supply.
An expert from the University of International Business and Economics explained it clearly: Oil is the most basic raw material; its price increase raises the cost of the entire economy. This is what’s known as “imported inflation.”
03 How Strong is China’s Energy Security?
As the world’s largest crude oil importer, about half of our imported crude oil passes through the Strait of Hormuz. If the strait were to be blocked for an extended period, how significantly would we be affected?
Here’s some reassurance:
Erica Downs, a researcher at Columbia University, points out that China holds approximately 1.4 billion barrels of crude oil in its strategic reserves. Even in an extreme scenario where imports from the Middle East are completely cut off, this reserve would be sufficient to cover a supply gap of about six months.
This is why the term “energy security,” which used to sound vague, now represents a solid foundation of confidence.
Besides reserves, we have other backup plans:
- Pipeline support: The China-Russia, China-Kazakhstan, and China-Myanmar oil and gas pipelines can increase transport capacity in extreme circumstances, aiming to raise the proportion of land-based imports from 20% to over 25%.
- Diversified imports: Data from 2025 shows that Russia will account for 17.5%, Saudi Arabia 14.17%, and Brazil 12%. The strategy of “not putting all eggs in one basket” has already proven effective. Of course, crisis can also be an opportunity. If the turmoil in the Middle East continues, it may prompt us to accelerate our clean energy transition. A Columbia University researcher also stated, “I wouldn’t be surprised if the turmoil in the Middle East prompts China to accelerate its clean energy transition.” Look at the current electric vehicle penetration rate; it’s almost 50%. Solar power and energy storage sectors might see a new wave of growth.
In conclusion
Back to the initial question: Can 400 million barrels of oil suppress oil prices?
In the short term, it can cool down market sentiment and prevent oil prices from suddenly spiraling out of control and breaking through the $120 mark. However, in the long term, as long as the geopolitical issues remain unresolved and navigation in the Strait of Hormuz doesn’t resume, oil prices will find it difficult to return to the $60-70 range seen at the beginning of the year.
For ordinary people like us, this volatility serves as a reminder:
- If you have travel plans soon, buy your tickets early and pay attention to the fuel surcharge adjustment window on April 5th.
- Understand inflationary pressures, manage your family’s asset allocation well, and don’t keep all your money in cash.
- Focus on energy transition opportunities; high oil prices often force the accelerated adoption of new energy sources.
This oil game, on the surface, is a numbers game, but behind it lies a power struggle among major nations. The 400 million barrels of reserves are a “ballast,” but true calm requires peace.
Data sources: International Energy Agency (IEA), Citigroup, JPMorgan Chase, Columbia University, Securities Times, Xinhua News Agency, and public market reports.
