According to the Financial Times, analysts are skeptical about whether the release of strategic reserves can resolve the crisis in the Strait of Hormuz, believing that the current scale of supply shocks far exceeds the limits of any historical reserve release.
G7 finance ministers stated on Monday that countries are prepared to &#34;take necessary measures&#34; and will continue discussions on releasing oil reserves to address the energy crisis triggered by the blockage of the Strait of Hormuz. This crisis has led to a reduction of up to 20 million barrels per day in oil and refined product supplies flowing through the strait.
Following the news, the market reacted swiftly—Brent crude benchmark prices fell from a high of $119 per barrel on Monday to below $90. As of the time of writing, Brent is quoted at $92.
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However, several market participants warned that even if countries release hundreds of millions of barrels from reserves, the release rate (historically a maximum of 1.3 million barrels per day) is far less than the scale of the supply disruption (20 million barrels per day), and if the situation in the Strait of Hormuz remains tense, there is limited room for oil prices to decline.
<h2>Doubts About the Actual Effect of Reserve Releases on Oil Prices</h2>
Historically, large-scale releases of strategic oil reserves have only occurred five times, the earliest dating back to the Gulf War from 1990 to 1991, with the most recent being after Russia's invasion of Ukraine in 2022. However, none of the aforementioned releases were sufficient to address the magnitude of the current crisis.
Martijn Rats, a global oil strategist at Morgan Stanley, stated that the existing evidence regarding whether releasing reserves can lower oil prices is &#34;clearly mixed.&#34; &#34; Many times, oil prices continue to rise because the release of reserves itself sends a signal to the market—that we are in a highly tense moment,&#34; he said.
Paul Horsnell from the Oxford Institute for Energy Studies also pointed out that the release of reserves does not necessarily change market behavior. Buyers often continue to compete for any available crude oil flows rather than relying on the limited stocks held by the government. &#34;Using reserves to replace flows is extremely difficult,&#34; he said, &#34;the market is never satisfied with that.&#34;
<h2>Global Reserve Totals: Ample on Paper, Limited in Practice</h2>
On paper, the member countries of the International Energy Agency (IEA) hold approximately 1.2 billion barrels of public emergency reserves, along with adjustable industry stocks, making the total substantial.
According to IEA data, by the end of last year, government-controlled crude oil reserves in OECD countries slightly exceeded 900 million barrels, with another approximately 300 million barrels of refined products (including gasoline and diesel). Additionally, industry players such as oil companies, traders, and refineries hold about 2.8 billion barrels of oil products, of which 600 million barrels are technically under government control.
However, these numbers are significantly discounted in practical operations. Horsnell pointed out that some of the stocks counted as reserves are actually part of normal commercial operations, such as crude oil in transit in pipelines. &#34; You can't release all of it, or the entire system will come to a standstill,&#34; he said
In addition, countries like the UK and Greece actually have no government-controlled reserves and rely entirely on commercial inventories, with considerable flexibility in statistical standards.
The IEA also estimates that approximately 2 billion barrels of crude oil are currently loaded on oil tankers at sea, a significant portion of which belongs to Russia, Iran, or Venezuela. If countries revise their sanctions, this portion of crude oil could theoretically be released to buyers.
<h2>Release speed far behind the scale of the gap</h2>
Even if countries are determined to use their reserves, the release speed is a major constraint. Past releases have typically been sold to large oil companies and traders through auctions, which then transport the oil to refineries in need; European governments have also allowed refineries to reduce their statutory holdings of refined oil products to push more oil onto the market.
Rats stated, &#34;The historical record is a total daily release of 1.3 million barrels by all IEA member countries. Theoretically, it might be possible to achieve a daily release of 3 million to 3.5 million barrels, but this has never been realized.&#34;
In contrast, under normal circumstances, about 20 million barrels of crude oil and refined oil flow through the Strait of Hormuz daily. Horsnell bluntly said, &#34;This is the largest oil crisis in history, and the scale of the problem far exceeds any possible release from strategic reserves.&#34;
<h2>Asia is the hardest hit, and Europe will also face shortages</h2>
In the face of supply shocks, Asia is under the most pressure. Due to heavy reliance on crude oil imports from the Middle East, some governments in Asia have begun to initiate energy rationing and restrict refined oil exports.
Kitt Haines, an oil inventory analyst at the energy research firm Energy Aspects, stated, &#34;Everyone will face challenges. I don't think any plans have ever considered this level of supply disruption. Asia is particularly hard hit because it imports the largest amount of crude oil from the Middle East.&#34;
Although U.S. and EU politicians currently appear calm about the tight supply situation, market observers' concerns are evidently more urgent.
Rats pointed out that if the situation continues, Europe will face a shortage of aviation fuel &#34;within weeks&#34; and warned that the problem has spread to Asia and the U.S. &#34;This is the largest supply shock in oil market history, nearly twice the scale of the Suez crisis, which at that time affected 10% of global supply,&#34; he said

The G7 is "ready at any time" to take necessary measures to support global energy supply. However, analysts warn: historically, the highest record of the IEA's member countries combined is a daily release of 1.3 million barrels, while the current disruption in the Strait of Hormuz has led to a daily supply cut of 20 million barrels, with the release rate far below the scale of the supply cut. If the situation in the Strait of Hormuz remains tense, there is limited room for oil prices to decline

- Analysts express skepticism about whether releasing strategic reserves can alleviate the crisis in the Strait of Hormuz, noting that the current supply shock exceeds any historical reserve release limits.  
- As of now, oil flowing through the strait has decreased by up to 20 million barrels daily, leading to significant price volatility in the market, with Brent crude dropping below $90 despite ongoing discussions among G7 finance ministers on further releasing oil reserves.  
- The actual effectiveness of these reserves is questioned, as the historical release rate rarely matches the scale of the current crisis, posing severe challenges for countries heavily reliant on Middle Eastern oil.

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How much oil would the G7 need to release from its reserves to stabilize oil prices?