400M Barrels of Oil Is a Lot, but Maybe Not Enough

Oil's emergency parachute was just yanked, but no one's sure how much softer the landing will be. The Guardian's Heather Stewart reports that the International Energy Agency is coordinating its biggest-ever drawdown of emergency oil reserves: 400 million barrels, roughly a third of members' government stockpiles, in response to the price spike tied to the US-Israel war on Iran and Iran's effective shutdown of the Strait of Hormuz. The UK is in, releasing 13.5 million barrels, and G7 finance ministers have been looped in as governments try to blunt the blow to motorists and businesses.

History suggests such moves can shave $10 to $20 off a barrel, but this shock may be bigger than the tool. Hormuz disruptions could be choking off around 10 million barrels a day, far more than past IEA releases have covered, economists warn. There's also the problem of getting oil where it's needed and the reality that these reserves are finite and partly symbolic. One energy veteran even raises the prospect of energy rationing in the UK. The full Guardian analysis, which includes expert warnings, can be found here.