The International Energy Agency said its 32 member countries unanimously agreed to make 400 million barrels of oil from emergency reserves available to the market. It described this as the largest coordinated release of strategic oil reserves to date.
The IEA said the release would take place over a period tailored to each country’s national circumstances. It also said it will continue to monitor global oil and gas market developments.
The agency stated that the Middle East conflict is affecting global energy markets. It added that Asia is the region most affected by disruptions in gas supply.
The announcement followed earlier indications from some governments about releasing reserves. Japan said it could start releasing oil reserves as early as 16 March, and Germany also indicated it would release part of its reserves.
West Texas Intermediate US oil traded around $85.30 on Wednesday. Since the start of the European session, it moved between $82 and $88 with no clear direction.
With the largest-ever coordinated reserve release announced, the initial reaction should be to prepare for downward price pressure on crude. This 400 million barrel figure is a significant supply shock, making bearish positions like buying put options on WTI or selling front-month futures contracts a primary consideration. The market’s current stability around $85 suggests it may be underestimating the full impact of this supply hitting the market over the coming weeks.
However, we must remember the precedent set back in 2022 when a large strategic release was announced to counter the effects of the Ukraine conflict. While prices dipped initially, the underlying geopolitical tensions and strong demand caused them to rebound within months. That release provided only a temporary cap on prices, not a long-term solution, a pattern that could easily repeat itself now.
Recent data reinforces the idea that underlying fundamentals remain strong, potentially limiting the downside. The latest Energy Information Administration (EIA) report showed global oil demand for 2026 was just revised upwards by 1.9 million barrels per day, citing robust consumption in Asia. Furthermore, last week’s U.S. commercial crude inventories saw a surprise draw of 2.1 million barrels, indicating the market is already tight even before accounting for the conflict’s disruptions.
This creates a high-uncertainty environment, which points directly to a spike in volatility. The CBOE Crude Oil Volatility Index (OVX) is currently trading near 42, a relatively elevated level that signals trader nervousness. This suggests that strategies that profit from large price swings, such as long straddles or strangles, could be effective whether the price breaks below $80 or rallies past $90.
Given the release will be staggered over time, a time-based strategy using calendar spreads is also attractive. We could see near-term contracts, like for May delivery, weaken significantly while longer-dated contracts for September or December remain stronger. A trader might consider buying December 2026 call options while selling May 2026 calls to capitalize on this expected curve flattening.
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