TEHRAN – National strategic oil reserves are being cut across the board to cushion the price explosion. But the war continues, the supply is still disrupted – and the reserves are not infinite.
The war with Iran and the closing of the Strait of Hormuz—a key sea passage through which before the conflict about 20 percent of the world’s oil trade passed—caused a shock to oil supplies not seen in decades.
Because of this pressure, countries around the world are frantically looking for alternatives to compensate for the quantities that are no longer arriving.
Many governments, especially in Asian countries that depend heavily on energy from the Middle East, have also introduced measures to reduce fuel demand.
In March, the International Energy Agency (IEA) coordinated the massive release of around 400 million barrels of oil from the emergency stocks of industrialized countries. The aim of that move was to ensure sufficient supply and stabilize the price of oil.
Before the war, in the global crude oil market, the supply was greater than the demand, and the large economies created huge strategic reserves. China, the USA and Japan have the largest reserves in the world, it says DW.
At least for two months of consumption
According to the US Energy Information Administration (EIA), in December 2025, China accumulated nearly 1.4 billion barrels in its reserves, including commercial and government reserves.
The US held about 413 million barrels in its strategic oil reserve, with an additional 411 million barrels in commercial stocks. Japan had the third largest strategic reserves, with about 263 million barrels in state reserves.
EU countries are obliged by law to store a necessary reserve corresponding to at least 90 days of imports or 61 days of consumption.
The member states participated with about 20 percent in the release of 400 million barrels within the coordinated action of the IEA, whereby Germany sent 19.5 million barrels to the market, France 14.6, Spain 11.6 and Italy 10 million.
According to EIA data, India had about 21 million barrels in its strategic reserves. They currently cover only about 9.5 days of the oil it normally imported, warns the advisory company S&P Global.
When the stocks of state-owned oil companies are included, the coverage increases to about 74 days.
In addition to these strategic reserves, millions of barrels of Russian oil remained in tankers stuck at sea after the US temporarily eased sanctions to increase global supply.
A means to calm the market
So far, these stocks have helped cushion the energy shock and reduce supply disruptions. But almost three months after the outbreak of war, traffic through the Strait of Hormuz is still blocked. The market these days was hoping for an agreement between Washington and Tehran, but apparently it is not so easy.
And as the supply disruption continues, countries are also reaching for their strategic and commercial supplies.
The IEA reported that global oil stocks fell at a record pace in March and April and are now down 246 million barrels.
The director of the agency, Fatih Birol, recently warned that oil reserves “are not infinite” and that they are “very quickly” decreasing around the world. He also emphasized that it will take “a lot of time” for production and processing capacities to return to pre-war levels.
American investment bank Goldman Sachs issued a similar warning last week about the rapid decline in oil reserves. Capital Economics chief economist Neil Shearing wrote in an analysis on May 18 that if the current pace of discharge continues, commercial oil inventories could fall to critically low levels by the end of June.
If supply conditions do not improve soon, prices could rise sharply, Shearing warned.
Finally – a shortage?
The situation could cause panic in the market and fear of shortages, especially during peak summer demand. If the disruption in supply continues, the shortage will not be felt equally in all parts of the world and in all sectors, according to Antoine Halff, an energy expert at Columbia University’s Center for Global Energy Policy.
Asian countries are likely to be the hardest hit due to their high dependence on energy sources from the Middle East, while air traffic and aviation fuel are among the sectors that will feel the consequences the most.
The rise in oil prices will be felt everywhere, including countries with large domestic production like the US, Halff said. Prices have already risen from pre-conflict levels, reflecting supply constraints and geopolitical risk.
At the same time, they change quickly and are dependent on current news: they fall when a quick solution to the conflict is announced, and rise when it looks like the strait will remain closed for a longer time.
RBC Capital Markets’ Helima Croft believes markets may be underestimating the difficulty of conflict resolution. It is a fundamental fact, she wrote in the report, that expectations about the quick and complete reopening of the Strait of Hormuz are based on unrealistic assumptions about the ease of the solution and the strategic interests of the parties involved.
Reserves are not infinite
If the current disruption in supply continues, the cumulative loss of oil will exceed one billion barrels by the end of the month, and will already reach 1.5 billion barrels by the end of June.
This could launch the price of oil towards the highs of 2008, after which a drop in demand would stabilize the market.
Some countries have already introduced measures to reduce demand and save fuel, such as a shorter work week in the Philippines and a reduction in the use of transport in Pakistan.
Despite dwindling supplies, governments are wary of a new coordinated release of oil from strategic reserves.
French Finance Minister Roland Lescure, who hosted his G7 colleagues last week, told the Financial Times that stocks were “limited” and could not be released without a clear view of the duration and intensity of the conflict.
Halff believes that if the Strait of Hormuz remains blocked for longer, governments will not have much ability to simultaneously ensure supply and keep prices under control.
Releasing oil from strategic reserves can help, but only to a certain extent. Because the amount of reserves is not unlimited.
