Germany weighs tapping oil reserves as Iran conflict strains energy markets
Economic advisors in Germany have called for action as energy markets face pressure from the escalating conflict in Iran. Gabriel Felbermayr, a newly appointed advisor, urged policymakers to consider tapping into strategic oil and gas reserves. The move aims to ease economic strain caused by rising prices and potential supply disruptions.
Monika Schnitzer, another key advisor, clarified that such reserves are not intended to counter long-term price increases. Instead, they serve as a short-term buffer in emergencies.
The G7's oil reserves were originally created to handle severe supply crises. In the past, these stocks have been released to quickly boost supply and steady prices during major disruptions. Germany currently holds around 23 million tonnes of oil but has almost no natural gas reserves. By comparison, Austria maintains additional gas stocks.
Felbermayr emphasised that coordinated efforts, particularly with the U.S., would be essential for any country hoping to sway global markets. Many OECD nations, including members of the International Energy Agency (IEA), collectively store 1.2 billion barrels of emergency oil, plus 600 million barrels in state reserves. These reserves are designed to cover 90 days of net import needs and soften sudden price spikes.
Discussions about deploying them now have gained traction due to the ongoing crisis. Felbermayr argued that using the reserves could help mitigate economic damage from the conflict. However, Schnitzer warned that such measures should not become a permanent solution for sustained price rises.
The debate over strategic reserves highlights their role in short-term stabilisation rather than long-term fixes. Germany's limited gas stocks contrast with its oil holdings, leaving it more exposed in certain energy sectors. Any intervention would require close international cooperation to have a meaningful impact on global markets.
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