Oil is on its way....

Emergency oil is on its way. So why are oil prices still high?

By Hanna Ziady

Last week, the member countries of the International Energy Agency, including the United States, agreed to release 400 million barrels of oil from their reserves. But global oil prices have stayed high.

That’s because Tehran’s near-blockade of the Strait of Hormuz means that some 15 million barrels of crude oil and 5 million barrels of oil products are cut off from the global market every day. In other words, 400 million barrels of crude would be absorbed in just 26 days.

“The war in the Middle East is creating the largest supply disruption in the history of the global oil market,” the International Energy Agency said in a statement Sunday.

“This emergency collective action, by far the largest ever, provides a significant and welcome buffer. But the most important factor in ensuring a return to stable flows is the resumption of regular transit of shipping through the Strait of Hormuz,” the agency added.

It noted that oil stocks from Asia and Oceania would be made available immediately, while those from the Americas and Europe wouldn’t be released until the end of March.

Oil inventories can be released to the market in a variety of ways, including through tenders, loan agreements or direct sales to refiners, according to the agency.