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Largest Oil Reserve Release Limited If Hormuz Stays Closed: S&P

The International Energy Agency has announced the largest release of emergency oil stocks in history to counter supply disruptions from the West Asia conflict. However, S&P Global Energy analysis indicates this measure offers only a limited solution while the critical Strait of Hormuz remains closed, creating a severely unbalanced market. The agency notes it will take months for the released oil to offset the massive supply reduction seen in March alone. S&P warns that if the strait's closure extends for months instead of weeks, crude oil prices could surge to new record highs.

Key Points: Strategic Oil Reserve Release a Limited Fix: S&P Global

  • Largest-ever IEA oil reserve release announced
  • Strait of Hormuz closure creates major supply imbalance
  • Release may not quickly aid Asian markets
  • Prolonged closure could drive record oil prices
  • S&P forecasts Brent at $70-$100 through 2026
2 min read

Release of strategic oil reserves a limited solution for unbalanced market: S&P Global Energy

S&P Global Energy says the IEA's historic oil stock release is only a partial solution while the Strait of Hormuz remains closed, warning of market imbalance.

"The market is seriously unbalanced and that will continue until the Strait is reopened - Jim Burkhard, S&P Global Energy"

New Delhi, March 15

Plans for the largest oil reserves distribution in history, announced by the International Energy Agency this week, are expected to be a limited solution if the Strait of Hormuz remains closed, according to S&P Global Energy.

The International Energy Agency (IEA) on Wednesday announced the largest-ever release of emergency oil stocks in its history, making 400 million barrels of oil available to global markets to mitigate disruptions caused in the global energy supply by the ongoing West Asia conflict.

S&P Global Energy asserted that the plan to release oil from reserves will help the market adjust to the current imbalance. However, it remains to be seen how the release will support the markets that need it most, particularly Asian markets, the analysis by S&P said.

It will take months for the 400 million barrels to match the 430 million barrel reduction in global supply in the month of March alone, it noted.

According to Jim Burkhard, Vice President and Global Head of Crude Oil Research, S&P Global Energy, "There is too much oil that cannot be exported via the Strait of Hormuz and not enough in Asia, where stocks are running down. The market is seriously unbalanced and that will continue until the Strait is reopened and upstream and downstream operations return to normal. It will not happen quickly."

The disruption in the Strait of Hormuz represents the largest oil supply disruption in history.

S&P Global Energy estimates that roughly 3 to 4 million barrels per day of oil was exported in the first 11 days of March via routes that bypass the Strait of Hormuz. By contrast, 21 million barrels per day of oil exports transited the Strait before the war.

Against this backdrop, S&P Global Energy has updated its base case outlook with the expectation for Dated Brent prices ranging between USD 70-100 on a monthly average basis for the remainder of 2026.

This outlook assumes secure tanker flows via the Hormuz resume in the coming weeks. However, the potential for exceptional volatility remains due to the uncertainty of the situation. If the Strait of Hormuz were to be closed for a couple of months (instead of weeks), crude oil prices would likely hit new record highs, it said.

- ANI

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Reader Comments

P
Priya S
The article rightly points out the focus on Asian markets. While the IEA's move is welcome, it feels like a temporary band-aid. The real solution lies in diversifying supply routes and sources. India should strengthen its ties with other oil-producing nations in Africa and the Americas.
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Aman W
USD 70-100 range for the next two years? That's a massive window and shows the uncertainty. This volatility will make budgeting for everything from transport to manufacturing very difficult. Hope our policymakers have a solid contingency plan.
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Sarah B
Living in Mumbai, the traffic is insane. If fuel prices spike again due to this, it will hurt everyone who commutes. This crisis should be a wake-up call for better public transport infrastructure in our megacities. We can't keep relying on personal vehicles if oil is this unstable.
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Vikram M
Respectfully, while the analysis is good, it misses the human cost. "Market imbalance" sounds technical, but it means higher costs for fertilizers, plastics, and essentials. The farmer and the small business owner feel this pinch the most. The solution needs to be faster and more equitable.
K
Karthik V
The numbers are staggering. 21 million barrels a day down to 3-4 million? No wonder there's a crisis. Time to seriously invest in electric vehicles and solar power. Jai Hind, but we need to be energy independent. This geopolitical risk is too high.

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