NEW YORK (AP) — A widening war in Iran has halted oil tankers, made targets of refineries and spooked investors worried about the cascading impact of spiking energy prices.
If it might seem like the ideal time to dip into the world’s emergency oil stockpiles, global leaders have so far responded with reluctance.
Here is a look at the energy supplies that countries hold and when they tap them:
Since war erupted in the Middle East on Feb. 28 with U.S.
and Israeli attacks on Iran, the flow of oil tankers through the Strait of Hormuz has all but stopped, cutting off a vital passageway for a huge amount of the world’s oil.
That has sent prices of oil soaring.
Brent crude oil, the international standard, surged to nearly $120 a barrel Monday, about 65% higher than when the war started, before retreating toward $90.
Countries around the world hold vast quantities of oil that they can use in the event of a crisis, including the U.S., which holds a massive emergency supply — known as the Strategic Petroleum Reserve — in underground salt caverns in Texas and Louisiana.
Because oil is a global commodity and flooding the market with a sudden stream of new supply has international implications, countries often talk to one another before tapping reserves. That includes coordinating with the International Energy Agency, an organization created in the aftermath of the 1973 oil crisis.
But opting to use oil reserves is never a simple calculation, particularly when linked to a war with constantly shifting parameters and no clear timeline.
“The key question on drawing down these reserves remains one of, ‘How long will this conflict last?’” says Tom Seng, an energy finance professor at Texas Christian University. “And, more importantly, ’How long with the Strait of Hormuz remain blocked?’”
Oil reserves have been tapped when the market has faced major disruption in the past, including wars in Iraq, Libya and, most recently, in Ukraine.
Kenneth Medlock, senior director of the Center for Energy Studies at Rice University, says it’s not a matter of whether the current conflict is serious enough to merit intervention, but whether the precise moment has arrived.
“The price is up but it could get worse,” Medlock says. “What happens if this drags on for two, three months? Then you run into a situation where you lose your buffer.”
Each of the 32 member countries of the IEA promises to have a reserve at least equivalent to what they import in a 90-day period. The U.S. exports more than it imports, maintaining its reserve despite there being no requirement. But for other countries, tapping their reserves will result in them eventually needing to replenish what was taken.
“Because of that, countries tend to keep reserves for a last-resort scenario, should the disruption be prolonged,” says Maksim Sonin, an energy executive who works with Stanford University’s Hydrogen Initiative.
So far, leaders have been reticent to tap reserves.
Over the weekend, U.S. President Donald Trump downplayed the idea of turning to the Strategic Petroleum Reserve, saying supplies were ample and prices would soon fall.
Representatives from the Group of Seven major industrialized powers discussed the issue Monday, but likewise decided against using strategic reserves.
“We’re not there yet,” French Finance Minister Roland Lescure said after chairing the G7 meeting. Still, he told reporters in Brussels that the group was “ready to take necessary and coordinated steps in order to stabilize markets, such as strategic stockpiling.”
Fatih Birol, the executive director of the IEA, took part in the meeting, noting afterwards the “significant and growing risks for the market.” IEA member countries have more than 1.2 billion barrels of emergency oil on hand, the organization says.
Though leaders have so far held off from using their reserves, energy expert Brenda Shaffer says the fact that they are even discussing the option could ease markets.
“As long as the market keeps hearing about these possibilities,” says Shaffer, a professor at the Naval Postgraduate School, “I think that will have a smoothing effect on the global oil market.”
