Oil Prices Plunge as IEA Eyes Emergency Reserve Release Amid Hormuz Crisis
Oil prices — which had surged to above $119 per barrel on March 9, 2026, the highest since 2022 — pulled back toward $87.8 per barrel on March 10 after the International Energy Agency (IEA) signalled readiness to coordinate an emergency release of strategic petroleum reserves.
G7 energy ministers met in Paris to assess "the current security of supply" situation and discuss whether to release emergency oil stocks.
IEA Executive Director Fatih Birol stated he was "in close contact" with energy ministers from key energy producers and consumers.
The US proposed a coordinated release of 300–400 million barrels (25–30% of the 1.2 billion barrels held in IEA member reserves).
Analysts cautioned that a 100 million barrel release would represent less than five days of the roughly 20 million barrels per day that the Strait of Hormuz closure has disrupted.
The crisis was triggered by US military operations against Iran beginning February 28, 2026, which prompted Iran to threaten and partially begin mining the Strait of Hormuz.
The Strait of Hormuz: World's Most Critical Energy Chokepoint
The Strait of Hormuz is a narrow waterway connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea, lying between Iran to the north and Oman to the south. It is classified as the world's most important oil transit chokepoint by the US Energy Information Administration (EIA).
With Iran threatening to mine or close the Strait of Hormuz in retaliation for US-Israel strikes, the disruption of up to 20 million barrels per day triggered a global oil price shock, prompting G7 nations and the IEA to consider emergency reserves deployment.
International Energy Agency (IEA) and Strategic Petroleum Reserves
The IEA was established in 1974 in response to the 1973–74 Arab oil embargo, which exposed the vulnerability of industrialised countries to oil supply disruptions. It operates as an autonomous intergovernmental organisation within the OECD framework, headquartered in Paris.
The G7 energy ministers meeting and IEA's signalling of an emergency release followed the established framework created precisely for supply disruption scenarios like the Hormuz crisis. The announcement itself was enough to drive prices down from $119 to $87.8 — demonstrating the market signalling power of reserve releases even before physical stock is deployed.
Oil Price Volatility and India's Macroeconomic Exposure
India is the world's third-largest consumer of crude oil (after the US and China) and imports over 85% of its requirements. Oil price shocks therefore have significant macroeconomic consequences for India: they widen the current account deficit (CAD), fuel imported inflation, weaken the rupee, and raise the fiscal cost of subsidised petroleum products.
Key Details
- India's crude oil imports: approximately 4.6–5 million barrels per day
- West Asia supplies approximately 55–60% of India's crude oil imports (Saudi Arabia, Iraq, UAE together are top suppliers)
- Every $10 per barrel increase in crude oil price widens India's CAD by approximately 0.4–0.5% of GDP [Unverified — approximate RBI estimate range]
- India's strategic petroleum reserves (SPR): maintained at three locations — Visakhapatnam, Mangaluru, and Padur — with a combined capacity of approximately 5.33 million metric tonnes (about 39 million barrels)
- India is expanding its SPR programme with additional commercial storage proposed under the PPP model
- India is a member of the IEA as an Association country since 2017
The Hormuz disruption and the resulting oil price spike ($119/barrel) directly threatened India's macroeconomic stability, underscoring the importance of India's SPR programme and its strategic interest in maintaining open sea lanes through West Asia.
- Strait of Hormuz width: approximately 39–97 km; length approximately 167 km
- Daily oil flow through Strait of Hormuz (2024): ~20 million barrels per day
- Share of global seaborne oil trade through the strait: over 25%
- LNG: ~one-fifth of global LNG trade transits through the strait (primarily from Qatar)
- Oil price range on March 9–10, 2026: peaked at ~$119/barrel, fell to ~$87.8/barrel
- IEA founded: 1974; headquartered in Paris; 31 full members
- IEA reserve requirement: 90 days of net oil imports per member
- Total IEA member reserves: ~1.2 billion barrels
- Proposed US coordinated release: 300–400 million barrels (25–30% of reserves)
- India SPR capacity: ~5.33 million metric tonnes (~39 million barrels) at three underground rock cavern facilities
- India joined IEA as Association country: 2017