The International Energy Agency’s decision to release a record 400 million barrels of crude from emergency reserves was intended to dampen the recent surge in oil prices tied to the conflict involving Iran, and the move “should cushion the blow” to markets, according to an analysis by Wolfe Research.
Wolfe described the release as the most "significant of the policy steps reportedly under discussion by the White House," but the firm emphasized that the pace and timing of deliveries will be important to assess how much of the disruption is offset. The research house said it is awaiting further details on when and how the barrels will reach global markets.
Oil prices showed a mixed intraday reaction to reports and the subsequent official announcement. After media accounts of the IEA’s plans were published, prices initially fell on Wednesday but then reversed and climbed, leaving the market with little net response to the formal statement. At the time of the latest trading update, Brent futures for May delivery were reported up 5.2% at $92.25 a barrel, while West Texas Intermediate futures were up 5.3% at $87.93 a barrel.
Wolfe Research’s Tobin Marcus noted that much of the market movement connected to the release had already been reflected in prices. He wrote that "markets have not moved significantly on this announcement, as we believe it was largely priced on Monday." Marcus pointed to crude flirting with $120 per barrel on Sunday night before coming down sharply on Monday, a pullback Wolfe attributes in significant part to earlier reports that the G7 was preparing a major strategic petroleum reserve release in this size range.
"After crude prices flirted with $120/bbl levels on Sunday night, they came in sharply on Monday, which we attribute in significant part to the reports emerging at the time that the G7 was moving toward a major SPR release in this size range."
Marcus also observed that public commentary from the former U.S. president - saying the war was "very complete" - had further influenced sentiment by talking prices down. He underscored that the detailed scheduling of the 400 million-barrel release will determine how effectively it substitutes for supply potentially lost if the Strait of Hormuz is closed.
In Wolfe’s estimate, the 400 million barrels would approximate about 20 days of shipments through the Strait of Hormuz if the waterway were to be entirely shut. The research firm cautioned, however, that the release does not eliminate the need to restore normal traffic through the strait.
"In terms of aggregate scale, 400MMbbl would account for ~20 days of shipments through Hormuz if the Strait were fully closed," Marcus said.
Wolfe framed the SPR release as a substantial and material action likely to alleviate immediate market strain from the conflict. The firm added that easing of sanctions on Russian oil might further reduce pressure on markets at the margin. At the same time, it evaluated several other measures that have been discussed and judged many of them to be unlikely to produce meaningful relief.
- Some measures are not implementable by a single official - for example, a federal gas tax holiday - and therefore are constrained in their effectiveness.
- Other proposals, such as temporary waivers of the Jones Act, were deemed too limited in scale to materially affect global oil balances.
- Actions like export bans on crude and refined products were described as potentially disruptive and counterproductive.
Marcus summed up the outlook by signaling Wolfe’s view that after this large SPR release, additional policy help is unlikely. "We don’t think much more help is coming after this," he wrote.
The analysis leaves open two central points of uncertainty: the schedule for moving the 400 million barrels into markets, and whether closures or disruptions in the Strait of Hormuz materialize. Both factors will determine how much the record SPR release can offset supply tightness and shape near-term price dynamics.