Global Oil Reserve Rush Driven by Iran War Supply Shocks

The Iran war has sparked a global effort to build oil reserves as vulnerable countries seek to protect themselves against future supply shocks.

During the conflict, the near-total closure of the Strait of Hormuz cut off around 20% of global oil supplies for over three months, causing Brent crude prices to spike to nearly $120 per barrel.

The International Energy Agency (IEA) released a record 400 million barrels from its strategic petroleum reserves (SPRs), with the US contributing the largest share. This validated a strategy forged after the 1973 Arab Oil Embargo, under which IEA members must hold emergency stocks equal to at least 90 days of net imports.

China's large SPR, holding over a billion barrels, helped it reduce crude purchases by more than a third during the war and saved Beijing billions of dollars. Other countries, such as India and Pakistan, are now likely to expand their SPRs where fiscal space allows or strengthen demand-reduction plans instead.