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(Bloomberg) — The International Energy Agency said oil from an unprecedented stockpile release will be made available immediately in Asia, where buyers are clamoring to replace barrels lost to war-related disruptions in the Middle East.
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The speed with which supplies hit the market is one of the key variables traders are watching to gauge how effective the effort will be in taming oil price increases. The agency’s statement on Sunday came after it received implementation plans for a record 400-million-barrel reserve release announced last week.
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While supplies for Asia will begin to flow right away, barrels for Europe and the Americas will only become available from the end of March. Crucially, there was no update on the pace at which those volumes would be released.
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The IEA last week said that the oil market is seeing the biggest supply disruption in history as a result of the war in the Middle East, which has effectively blocked the vital Strait of Hormuz waterway, shutting in millions of barrels a day of production.
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Buyers in Asia are most reliant on flows from the Middle East, so the speed of reserve releases is particularly key for the region. Some countries have already adopted measures to limit fuel exports in a bid to ensure local supplies.
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But other parts of the globe are likely to feel the pinch soon, too. Jet fuel prices in Europe closed above $220 a barrel on Friday, while the region’s diesel futures were north of $150. The longer the conflict continues the bigger the impact on global oil markets is likely to be.
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Crude futures closed above $100 a barrel on Friday and traders are bracing for a tumultuous upcoming week after the US attacked military sites near Iran’s main oil exporting facility over the weekend.
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“This brings unprecedented additional volumes of oil to the market from 16 March onward,” IEA Executive Director Fatih Birol said in a post on X. “However, opening the Strait of Hormuz is vital for a return to stable flows.”
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On a global level, about 72% of the current committed volumes are crude oil. The volumes committed so far are as follows (in million barrels):
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