On April 8, the International Energy Agency (IEA) held an emergency meeting and announced a joint release of 400 million barrels of strategic petroleum reserves to calm the oil price surge caused by the Middle East conflict and stabilize global energy markets. This marks the largest reserve release in IEA history. Combined with the US-Iran ceasefire, the double bearish shock hit oil prices, reshaping the global energy landscape.
Under the plan, IEA member countries will release approximately 2.2 million barrels of crude oil per day over the next six months, totaling 400 million barrels. The United States will contribute 150 million barrels, European countries including Japan, Germany, and France will release a combined 180 million barrels, with the remainder shared by South Korea, Australia, and others. IEA Executive Director Fatih Birol stated the move aims to offset supply shortages from the Middle East, prevent uncontrolled oil price hikes, and safeguard global energy security.
Previously, the closure of the Strait of Hormuz had reduced global crude supply by roughly 9 million barrels per day, pushing oil above $120. The large-scale IEA reserve release, together with restored supply following the ceasefire, has rapidly reversed market supply-demand dynamics. The EIA now forecasts Brent crude to average around $115 per barrel in the second quarter and $96 for the full year.
Market reactions were violent. Crude futures tumbled sharply, with energy and chemical products weakening across the board. Domestic crude-related futures in China also opened lower, with SC crude, fuel oil, and asphalt all falling more than 3%. Analysts believe the IEA intervention and ceasefire have formed a “double punch,” likely pushing oil prices into a short-term correction. However, uncertainty in the Middle East persists, preventing a steep collapse.
In the long run, the episode underscores the fragility of global energy security. While the emergency IEA action stabilized markets temporarily, it does not resolve underlying insufficient production capacity. Global crude utilization rates now exceed 95%, with OPEC+ maintaining production cuts and limited supply flexibility. Should Middle East tensions reignite, oil prices could rebound.
For China, lower oil prices will help control domestic inflation and support manufacturing recovery. Meanwhile, accelerating the transition to new energy and improving energy storage capacity has become critical to ensuring energy security. In the short term, global energy markets will enter a period of volatile adjustment, with continued tug-of-war between geopolitics and supply-demand fundamentals.
