IEA released 400 million barrels as Brent neared $120 in Hormuz crisis

Vulnerable importing nations are moving to build domestic oil and gas reserves after the war in Iran severed roughly 20% of global supply for more than three months. Reuters reported that the near-total blockade of the Strait of Hormuz pushed Brent crude close to $120 a barrel before emergency stocks brought the market back under control. The collective scramble to rebuild and expand reserves could generate around 1 billion barrels of additional demand over the coming years.

The mechanism is straightforward: countries that suffered most are now buying insurance. At the start of the conflict, all 32 members of the International Energy Agency agreed to release 400 million barrels from strategic petroleum reserves (SPRs), the sixth such drawdown in the agency's history, with the United States contributing the largest share. The Financial Times noted that this affirmed the post-1973 standard requiring IEA members to hold emergency stocks equal to at least 90 days of net imports. China, not a full member, reportedly drew on its billion-barrel reserve to cut crude purchases by over a third and sidestep the worst of the price spike.

The chart below shows Brent over recent months, against which the spike toward $120 and the subsequent stock-driven recovery can be read.

What this means for UK buyers

The storage building is a structural demand story, and structural demand supports prices. For UK commercial buyers, the relevant question is whether this floor under crude feeds through to forward gas and power, given the link between oil-indexed LNG and National Balancing Point (NBP) gas. With imported LNG now over 40% of European gas supply, sustained restocking competition keeps upward pressure on the curve you are pricing renewals against.

The new storage initiatives concentrate in several places:

• India, targeting over 400 million barrels to reach the 90-day standard
• Pakistan, needing roughly 35 million barrels for 90 days of cover
• Australia, allocating $7 billion to maintain at least 50 days of fuel
• Singapore, weighing expansion of refining-linked storage
• Saudi Aramco, extending overseas storage beyond Japan, South Korea, Egypt, and northwest Europe

S&P Global reported that depleted inventories also need replenishing, with around 400 million barrels drawn from global stocks since the war began and further draws expected through summer. That replenishment sits on top of the new reserve demand.

The timing offers some cushion. Bloomberg reported the IEA expects global supply to rebound next year as Middle East production recovers, potentially exceeding demand by over 4 million barrels per day, which would absorb much of the storage-driven buying. That balance holds only if Gulf supply returns on schedule. Watch the pace of Hormuz reopening and Middle East output recovery through the summer: a slower rebound, against this restocking demand, is the scenario that pushes the forward curve higher and reshapes your renewal window.