IEA Unleashes "Epic" Strategic Reserve Release, Yet Oil Prices Still Surge—Why Isn't the Market Buying It?

Despite the IEA and the U.S. urgently announcing record-breaking strategic reserves releases, crude oil prices continue to surge, with Brent crude futures breaking through the $100 mark.

On Thursday, WTI crude soared over 7%, reaching $95, and Brent crude rose more than 7%, returning to $98. Brent futures surged up to 9%, touching $100 per barrel.

Even though the International Energy Agency (IEA) announced its largest-ever emergency oil release, it failed to halt the upward momentum of prices. Traders remain skeptical about whether releasing reserves can offset the massive supply shock caused by the Middle East war.

On Wednesday, the IEA stated that its 32 member countries will release 400 million barrels of oil from emergency reserves. This is the largest coordinated release since the 1973 oil embargo.

The U.S. announced it will release 172 million barrels from its Strategic Petroleum Reserve. Energy Secretary Jennifer Granholm said the action could start as early as next week and take approximately 120 days to complete.

However, the oil market remains unmoved by these announcements, with prices continuing to climb. This highlights traders’ deep skepticism: if shipping through the Strait of Hormuz remains blocked, these releases will be insufficient to fill the huge supply gap.

Raymond James senior investment strategist Pavel Molchanov said, “Current oil prices are still in panic mode. The prices we see are infused with a lot of emotion, fear, and uncertainty.”

MST Marquee energy analyst Saul Kavonic pointed out that the IEA’s record strategic release can indeed add some much-needed reserves to the market, but at best, it can only cover about a quarter of the 20 million barrels per day supply shortfall caused by the closure of the Strait of Hormuz.

In an interview, he said, “However, the IEA’s decision also sends a signal that the risk of oil shortages is extremely severe. It suggests they believe this war is unlikely to end soon, and that current inventories will need to be replenished afterward, meaning that even if the war ends, oil prices will continue to rise.”

About one-fifth of the world’s oil supply passes through the strategic chokepoint—the Strait of Hormuz, connecting the Persian Gulf to global markets.

Industry insiders say that a key reason for ongoing market anxiety is the uncertainty over how quickly this oil can actually flow into the market.

Although the IEA’s announcement marks an unprecedented intervention, the agency did not provide specific details on how fast member countries will release reserves or how the oil will be distributed.

Molchanov pointed out, “This is a critical question: how long will it take for these 400 million barrels to actually reach the market? 400 million barrels is a huge number… but this is the most severe oil supply disruption since the 1970s, so we need a large amount of oil, and we need it quickly.”

Strategic reserves are held separately by each IEA member country, which means technical and logistical bottlenecks could slow down the flow of oil. Molchanov estimates that it could take 60 to 90 days for this oil to be scaled into the market. For traders hoping for immediate relief, this timeline is simply too long.