Analysts express skepticism about whether strategic reserve releases can resolve the crisis in the Strait of Hormuz, noting that the current scale of the supply shock far exceeds the maximum volume of any historical reserve release.

G7 finance ministers stated on Monday that countries are prepared to "take necessary measures" and will continue consultations on releasing oil reserves to address the energy crisis triggered by disruptions in the Strait of Hormuz. The crisis has already reduced the daily flow of oil and refined products through the strait by up to 20 million barrels.

Following the announcement, markets reacted swiftly—the Brent crude benchmark price fell from a high of $119 per barrel on Monday to briefly below $90. At the time of writing, Brent was trading at $92.

However, multiple market observers warn that even if countries release hundreds of millions of barrels from reserves, the release rate—historically capped at 1.3 million barrels per day—pales in comparison to the disruption scale of 20 million barrels per day. If tensions in the Strait of Hormuz persist, the downside for oil prices will be limited.

The actual effectiveness of reserve releases on oil prices remains in question. Historically, large-scale strategic petroleum reserve releases have occurred only five times, dating back to the First Gulf War in 1990–1991, with the most recent following Russia’s invasion of Ukraine in 2022. However, none of those releases were large enough to match the magnitude of the current crisis.

Martijn Rats, global oil strategist at Morgan Stanley, noted that evidence on whether reserve releases can lower oil prices is "decidedly mixed." "Often, prices continue to rise because the release itself signals to the market that we are in a highly tense moment," he said.

Paul Horsnell of the Oxford Institute for Energy Studies also pointed out that reserve releases do not necessarily change market behavior. Buyers often continue scrambling to secure any available crude flows rather than relying on limited government-held stocks. "Using stocks to replace flows is extremely difficult," he said. "The market is never satisfied with that."

Globally, reserve totals appear ample on paper but are limited in practice. International Energy Agency (IEA) member countries hold approximately 1.2 billion barrels of public emergency reserves, with additional industry inventories that can be mobilized, making the total volume substantial.

According to IEA data, as of the end of last year, OECD countries held just over 900 million barrels of government-controlled crude reserves, plus about 300 million barrels of refined products, including gasoline and diesel. Additionally, industry players such as oil companies, traders, and refineries hold around 2.8 billion barrels of oil products, of which 600 million barrels are technically under government control.

However, these figures are less meaningful in practical terms. Horsnell noted that some inventory counted as reserves is actually part of normal commercial operations, such as crude oil in transit through pipelines. "You can’t release all of it, or the entire system would run empty," he said.

Furthermore, countries like the United Kingdom and Greece have no government-controlled reserves at all, relying entirely on commercial stocks. There is also considerable flexibility in how countries report their reserves.

The IEA also estimates that around 2 billion barrels of crude are currently loaded on tankers at sea, a significant portion of which belongs to Russia, Iran, or Venezuela. If sanctions were revised, this oil could theoretically be made available to buyers.

Even if countries commit to using reserves, the release rate is a major constraint. Past releases typically occurred through auctions to large oil companies and traders, who then transported the oil to refineries in need. European governments have also allowed refineries to reduce mandatory refined product holdings, freeing up more supply for the market.

Rats stated, "The historical record is a combined daily release of 1.3 million barrels by all IEA members. Theoretically, 3 to 3.5 million barrels per day might be possible, but that has never been achieved."

By comparison, under normal circumstances, about 20 million barrels of crude and refined products flow through the Strait of Hormuz daily. Horsnell remarked, "This is the largest oil supply shock in history. The scale of the problem far exceeds any possible strategic reserve release."

Asia bears the brunt of the supply shock, while Europe will also face shortages. Given Asia’s heavy reliance on crude imports from the Middle East, some governments have begun implementing energy rationing and restricting refined product exports.

Kitt Haines, refined products inventory analyst at Energy Aspects, said, "Everyone will face challenges. I don’t think any contingency plan has ever considered a disruption of this magnitude. Asia is particularly hard hit because it imports the most crude from the Middle East."

Although U.S. and EU policymakers currently appear calm about supply tensions, market observers are clearly more concerned.

Rats indicated that if the situation continues, Europe could face jet fuel shortages "within weeks" and warned that the problem has already spread to Asia and the United States. "This is already the largest supply shock in oil market history, almost double the scale of the Suez Crisis, which at the time affected 10% of global supply," he said.