Global oil prices pared their gains following the organization’s announcement.
Members of the International Energy Agency (IEA) agreed on March 11 to release 400 million barrels of oil from reserves.
This is the largest withdrawal on record as governments attempt to mitigate the spike in global energy prices.
With global crude demand totaling approximately 100 million barrels per day, the latest supply injection is expected to be enough to cover about four days of consumption.
Oil prices pared some of their gains following the announcement.
The price of a barrel of West Texas Intermediate—the U.S. benchmark for oil prices—rose by more than 2 percent in the middle of the trading week to more than $85 on the New York Mercantile Exchange.
Brent, the global benchmark, jumped in price by 3 percent to about $90 per barrel in overseas markets.
Officials say this will take approximately 120 days to deliver, adding that they plan to replenish domestic stockpiles within a year.
“Unlike the previous administration, which left America’s oil reserves drained and damaged, the United States has arranged to more than replace these strategic reserves with approximately 200 million barrels within the next year—20 percent more barrels than will be drawn down—and at no cost to the taxpayer,” the Department of Energy said in a March 11 statement.
The IEA’s decision comes a day after 32 member governments convened an extraordinary meeting to assess fallout from the Iranian conflict and its impact on global market conditions.
Each country will release its emergency stockpiles into the market over a time frame, and some nations will take additional actions on top of these injections.
“The oil market challenges we are facing are unprecedented in scale, therefore I am very glad that IEA Member countries have responded with an emergency collective action of unprecedented size,” said IEA Executive Director Fatih Birol in a statement.
“Oil markets are global so the response to major disruptions needs to be global too,“ Birol said. ”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.”
Established in 1974, this is the sixth time that the group has coordinated a release from emergency inventories.
The IEA maintains more than 1.2 billion barrels of oil, and another 600 million barrels of industry stocks under government obligations.
It could take time for actual barrels of oil to reach markets, said Mark Malek, chief investment officer at Siebert Financial.
“Most of these reserves sit in underground salt caverns, not in tanks ready to pour,” Malek said in a note emailed to The Epoch Times. “You have to inject water, pump the oil up, move it through pipelines to terminals, and then ship it. That takes time.”
“[This could be a] pure psychology move, and the market responded to it like a patient responding to a placebo that they believe is real medicine,” Malek said.
By Andrew Moran and Evgenia Filimianova
