The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Yawen Chen

LONDON, March 11 (Reuters Breakingviews) - The world's big oil consumers are opening the taps. Faced with a blocked Strait of Hormuz, 32 members of the International Energy Agency — including the United States, Japan and Germany — on Wednesday agreed to release 400 million barrels of strategic reserves. The response to this splurge, more than double the previous record set in 2022? A 5% jump in prices of the black stuff to $93 a barrel.

The market shrug is understandable. The drawdown would offset only about 20 days of lost supply if the strait, through which 20 million barrels of crude and oil products usually pass daily, remained fully shut. Even assuming 6 million barrels a day could be rerouted through alternative channels, including Saudi Arabia's East-West crude oil pipeline, the cushion would extend to only 29 days. Since the first strikes on Iran took place over a week ago, any disruption lasting beyond the end of March would require further stock releases.

Then there's the problem of getting barrels to market. Strategic reserves are not a tap that can simply be turned on. In 2022, it took weeks for emergency supplies to reach consumers, and the peak level achieved was about 2.5 million barrels a day, according to Goldman Sachs analysts. Washington may be able to move faster. But even a 4 million barrels-a-day release would test logistical limits and risk displacing commercial flows already moving through ports and pipelines.

More importantly, the reserves may not match the market's real vulnerability. Strategic stockpiles consist mainly of crude. But Middle East disruption has quickly spilled into refined products. Kuwait, the world's second-largest exporter of jet fuel, has already cut refinery output. Lower crude flows to Asian buyers such as China, India, South Korea and Japan would have the same effect.

South Korea, Singapore and India are all pointing to lower near-term jet fuel exports. That matters, because inventories are already thin. Jet fuel is hard to store and not usually held in large government stockpiles: Europe's emergency reserves are weighted towards crude and diesel-like products. Asian jet fuel prices have already doubled since the war began.

China is the great unknown. The country may hold 1.1 billion to 1.4 billion barrels in strategic and commercial stocks, roughly that of all IEA governments combined. But Beijing has shown little appetite to use them, tapping these inventories only once in a limited 2021 trial, according to Capital Economics. Amid the current maelstrom it actually paused new export contracts for refined fuels, per Vortexa, an energy market analytics firm.

The result is an awkward mismatch. Governments can release a lot of oil, and that may briefly calm markets. But if the disruption endures, their reserves will be too little, and too diffuse.

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CONTEXT NEWS

The International Energy Agency $(IEA)$ proposed on March 11 the release of 400 million barrels of oil, the largest release of reserves in its history, to bring down crude prices that have soared amid the U.S.-Israel war with Iran.

The proposed release exceeds the 182 million barrels of oil that IEA member countries put onto the market in two steps in 2022 when Russia launched its full-scale invasion of Ukraine, the statement said.

Brent oil prices had risen 3.4% to $90.77 as of 1423 GMT on March 11.

(Editing by George Hay; Production by Streisand Neto)

((For previous columns by the author, Reuters customers can click on CHEN/yawen.chen@thomsonreuters.com))