Oil Demand Set to Boost as Governments Replenish Emergency Reserves

The global oil supply chain is recovering from the effects of the U.S.-Israeli war on Iran, which depleted emergency reserves by an estimated 1.5 billion barrels this year.

To replenish those reserves, governments are set to buy millions of barrels of oil through 2028, boosting demand for crude and potentially absorbing some of the expected global supply surplus.

The International Energy Agency (IEA) coordinated a record 400 million-barrel release after disruptions in the Strait of Hormuz drove crude prices sharply higher. Brent crude rose above $126 a barrel in late April and U.S. crude approached $120 in early March.

Refilling reserves could generate an additional 506,000 bpd (barrels per day) of crude demand in the fourth quarter of 2026, rising further next year, according to Michelle Brouhard, head of policy and geopolitical risk at Kpler.