The IEA has proposed the largest emergency oil release from strategic reserves in history

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GLOBAL MARKETS INVESTOR’S PORTFOLIO IS 🔥UP +97%🔥SINCE JANUARY 2024

DURING THE MARCH-APRIL 2025 MARKET TURMOIL, MAJOR US INDEXES FELL NEARLY 20%, WHILE THE GMI PORTFOLIO GAINED OVER 5%, FIND OUT HOW BELOW:

The IEA has proposed the largest release of oil reserves in history, exceeding the 182 million barrel record set in 2022, according to WSJ.

The proposal was circulated at an "emergency meeting", with countries expected to decide on Wednesday. It would pass if no member objects, but even one protest could delay the plan. IEA members currently hold 1.2 billion barrels in crude oil reserves.

According to JPMorgan estimates, coordinated G7 reserve release would only deliver ~1.2 million barrels per day Historically, emergency releases have peaked at ~1.4 million barrels per day, calculated as the combined monthly peaks of different countries achieved in separate months.

Furthermore, US reserve operational flexibility is likely lower than the 1.0 million barrels per day pace seen in 2022, due to ongoing site modernization and lower inventories.

Meanwhile, ~16 million barrels per day remain stuck inside the Gulf because of the Strait of Hormuz blockade.

Once pre-war cargoes clear and no new loadings depart, a 1.2 million barrels per day release would still be insufficient to offset potential losses of ~12 million barrels per day within two weeks from forced shut-ins.

Additionally, a 1.2 million barrels per day release covers just 7.5% of that gap.

Emergency reserves can buy time, but they do not replace lost supply or resolve flow constraints.

Interestingly, as the IEA prepares the release, member countries are coordinating with China to prevent it from using the opportunity to add barrels to its own reserves, as it did in 2022. The last IEA-Chinese coordination of this kind was in 2011 during the Libya crisis, when the US government made the request.

This also comes as Iran is still pushing huge amounts of oil to China through the Strait of Hormuz despite the war.

At least 11.7 million barrels of Iranian crude have passed through the strait since February 28, all headed to China, according to TankerTrackers, which told CNBC on Tuesday.

Many tankers have "gone dark," switching off their GPS tracking systems to avoid detection and targeting while passing through the waterway.

Iran has resumed loading tankers at the Jask terminal on the Gulf of Oman, bypassing the strait entirely, though loading a single supertanker there takes up to 10 days versus 1 to 2 days at the main Kharg Island terminal.

All these developments still keeps the market uncertainty extremely elevated which is priced in in the options.

The 1-month call-put skew on WTI Crude oil futures has risen to ~30, marking the highest level in at least 4 years.

This indicates investors are paying an unprecedented premium for options betting on higher oil prices versus lower prices.

The current skew even exceeds the peaks observed during the 2022 energy crisis after the Russia-Ukraine war.

Put simply, traders in the options market are betting the supply crunch is not over and the worst may be still ahead.

As a reminder, during geopolitical events, when oil prices jump, stocks decline, and vice versa.

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