The International Energy Agency (IEA) has taken a big step to meet the shortage of oil in the global market. The agency has approved the withdrawal of 400 million barrels of oil from the strategic reserves of its member countries. This is the largest-ever reserve release in the history of the IEA. However, economists believe that it will take a long time for such a large quantity to reach the market completely and its impact will be visible gradually.
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How long will it take for oil to reach the market?
Even though 400 million barrels is a huge number, it cannot be brought to market immediately. There are delays in oil reaching consumers due to limitations in logistics and pumping.
According to economists, it may take about 200 days for all this oil to be included in the global market. Japan and countries in the Asia-Pacific region have immediately started delivering 80 million barrels of oil from March 16. America and Europe will start their supplies by the end of March. According to US Energy Minister Chris Wright, it will take about 120 days to completely extract oil from their reserves.
What will be the impact on oil prices?
Recently, due to the closure of the Strait of Hormuz, the price of Brent crude oil reached $ 119.50 per barrel. After this announcement by IEA, the prices have decreased slightly and have come between 90 to 95 dollars per barrel.
Economist Abdullah Al-Kharif said such a large number does not mean an immediate solution. According to expert Jeff Currie, the supply shortage will not be resolved overnight and markets do not recover in the blink of an eye. Prices will remain under pressure as the daily output of 2 million barrels of oil cannot fully compensate for the loss of 15-20 million barrels from the Gulf countries.
How much oil will be obtained from which area?
32 member countries have voted unanimously in this decision. This includes 72 percent crude oil and 28 percent refined products like petrol and diesel.
America Region: 195.8 million barrels (this includes 172.2 million barrels from the US alone)
Asia and Oceania: 108.6 million barrels
Europe: 107.5 million barrels
