The International Energy Agency recently announced that after 32 member states unanimously agreed to deploy 400 million barrels of strategic petroleum reserves, the relevant reserves have begun to be released into the market. In terms of market performance, after the International Energy Agency announced the largest-ever release of reserves, international oil prices initially declined but subsequently surged again, approaching recent highs. This indicates that releasing reserves has had limited effectiveness in stabilizing oil prices. Why has this situation occurred? Is releasing reserves truly effective? If the impact is minimal, why are reserves still being released?

Can Releasing Reserves Fill the Supply Gap?
"Releasing reserves can buy time but cannot resolve the crisis." According to an analysis report by the U.S. investment firm Bernstein, the coordinated release of petroleum reserves by the International Energy Agency "cannot fill" the gap caused by supply disruptions and has a limited impact on oil price trends.

How much oil would the global market lose if the Strait of Hormuz were obstructed? Data from the International Energy Agency and other institutions show that disruptions in the strait could reduce global crude oil and related product supplies by 20 million barrels per day. Even if some crude oil could be transported via pipelines in Saudi Arabia and the UAE, limited pipeline capacity and the maximum throughput of Red Sea terminals would still leave a gap of over 10 million barrels per day in crude oil and related product supplies.

On paper, the 400 million barrels of petroleum reserves agreed to be released by International Energy Agency member states could compensate for the supply disruption caused by the obstruction of the Strait of Hormuz for several dozen days. However, in reality, releasing petroleum reserves involves multiple considerations.

Jason Bordoff, founding director of the Center on Global Energy Policy at Columbia University, stated that releasing reserves is far more complex than imagined. Taking the United States as an example, many reserves are stored in underground salt caverns in the Gulf of Mexico, and extraction speed is limited by technical capabilities. Additionally, the majority of Middle Eastern crude oil is shipped to Asian countries, and reserves released in other regions would need to rely on idle shipping capacity to enter the Asian market.

Samantha Gross, an energy expert at the Brookings Institution, analyzed that the International Energy Agency's strategic petroleum reserves might be released uniformly over two months, equivalent to 7% of global demand. In contrast, the obstruction of strait shipping actually impacts 15% to 17% of global demand. "This release of reserves sends the right signal but cannot fill the market gap."

How Effective Has Releasing Reserves Been Historically?
In its report on the release of reserves by International Energy Agency member states, Reuters analyzed that such actions are akin to "applying a band-aid to a wound." While short-term measures may have some effect, they cannot address the underlying issues.

Experience shows that releasing energy reserves does have short-term effects, but they are almost always "temporary painkillers." They can only alleviate market panic in the early stages of a crisis but cannot replace sustained supply. "They work every time, but the effect is never sufficient."

During the Gulf War in the 1990s, approximately 4 million barrels of crude oil exports were disrupted daily. The International Energy Agency coordinated the release of reserves by the United States and other countries. Analysts noted that while oil prices quickly declined after the release, the real reason was not the release of reserves but rather increased production by Saudi Arabia and other countries.

In 2005, when the United States was hit by Hurricane Katrina, daily crude oil production was disrupted by 1 million to 1.5 million barrels. Although releasing reserves helped stabilize oil prices in the short term, it could not address fundamental issues such as infrastructure damage, serving only as a "short-term transition."

During the 2011 Libyan war, approximately 1.6 million barrels of crude oil exports were disrupted daily. After the release of reserves, oil prices declined briefly before rising again. The market realized that Libya was unlikely to resume exports, and other oil-producing countries had limited capacity to increase production, meaning that releasing reserves could not solve long-term problems.

In 2022, when the Ukraine crisis escalated, Russia's daily crude oil exports were disrupted by over 5 million barrels. The International Energy Agency coordinated the release of approximately 240 million barrels of petroleum reserves. However, similar to the situation during the Libyan war, the large-scale release of reserves could not address long-term supply shortage expectations. Moreover, that release of reserves excessively depleted Western countries' petroleum reserves, leading to a significant decline in reserve levels that has not fully recovered to this day.

Why Release Reserves If the Effect Is Minimal?
If the effect is minimal, why release reserves? Some analysts suggest that the true purpose of releasing reserves lies not in "supply" but in "expectations." From the current situation, the greatest role of releasing reserves is to "buy time." By releasing reserves, the United States and other parties can create more room for military and diplomatic maneuvers in the short term, alleviating political pressure on governments.

In many Western strategic analyses, the role of strategic petroleum reserves is to "manage expectations," making the market believe that "governments have the ability to intervene in supply." In essence, they serve as a "psychological stabilizer." In the short term, releasing reserves can also partially alleviate the pressure of soaring prices for commodities such as gasoline, calming voter sentiment and addressing domestic political concerns.

Additionally, releasing reserves sends a signal internationally that the U.S.-led alliance system still possesses coordination capabilities. This signal can, to some extent, stabilize the confidence of allies and mend the rifts within the Western world caused by the U.S.-Israeli attack on Iran.

However, releasing reserves is never a fundamental solution to the oil supply crisis. The International Energy Agency stated that the only long-term solution is to restore the passage of the Strait of Hormuz. Releasing reserves cannot fill the supply gap or stabilize the energy market in the long term. In other words, having reserves does not allow the global energy market to "rest easy." What truly matters is achieving a ceasefire and restoring normal order as soon as possible.