Market Update: We break down the business implications, market impact, and expert insights related to Market Update: Korea to make record oil stockpile release under IEA’s Iran war response – Full Analysis.
Employees of the Korea National Oil Corporation check the readiness of emergency oil stockpile releases at the Ulsan oil storage facility on March 6. [YONHAP]
Korea will release a record amount of its oil reserves in line with an agreement among International Energy Agency (IEA) members to stabilize global oil markets rattled by the Iran war.
The country plans to unleash 22.46 million barrels of oil from its reserves, the Industry Ministry said late Wednesday, following the IEA’s decision to make 400 million barrels of oil from their reserves available to the market.
The release marks the largest-ever drawdown for both Korea and the IEA.
The contribution of each country in the collective endeavor was calculated in proportion to its share of the member countries’ total oil consumption. Korea’s planned release accounts for 5.6 percent of the total 400 million barrels to be released.
“(Korea) assesses that close cooperation with the IEA this time will contribute greatly to stabilizing the international oil market,” an industry ministry official said.
“Going forward, we plan to minimize the impact on the people’s economy and prices by closely cooperating with major countries to respond to the high oil prices stemming from the Middle East situation,” he added.
In a press release, the IEA said that the emergency stocks will be made available to the market “over a timeframe that is appropriate to the national circumstances of each member country,” and will be supplemented by additional emergency measures by some countries.
After the U.S. and Israel kicked off a joint campaign of military strikes on Iran on Feb. 28, oil prices surged. Disruptions to shipping through the Strait of Hormuz — responsible for about one-fifth of the world’s oil supplies — pushed up prices.
“The oil market challenges we are facing are unprecedented in scale, therefore I am very glad that IEA Member countries have responded with an emergency collective action of unprecedented size,” IEA Executive Director Fatih Birol was quoted as saying in the release.
“Oil markets are global so the response to major disruptions needs to be global too. Energy security is the founding mandate of the IEA, and I am pleased that IEA members are showing strong solidarity in taking decisive action together.”
The coordinated IEA stock release is the sixth in the history of the agency, which was founded in 1974 for a collective response to disruptions in global oil supplies. Previous collective actions were taken in 1991, 2005, 2011, and twice in 2022, according to the agency.
BY PARK EUN-JEE, YONHAP [[email protected]]