PARIS—The International Energy Agency has proposed the largest release of oil reserves in its history to bring down crude prices that have soared during the U.S.-Israel war with Iran, officials familiar with the matter said.
The release would exceed the 182 million barrels of oil that IEA member countries put onto the market in two releases in 2022 when Russia launched its full-scale invasion of Ukraine, the officials said. The proposal was circulated at an emergency meeting of energy officials from the IEA’s 32 member countries on Tuesday.
Countries are expected to decide on the proposal Wednesday. It would be adopted if none objects, but even one country’s protests could delay the plan, officials said.
The IEA proposal is intended to counter the massive disruption caused by the near-total closure of the Strait of Hormuz, the narrow waterway that connects the Persian Gulf to global markets. Roughly one-fifth of the world’s oil supply moves through the Strait every day and the threat of attacks on tankers by Iran have brought shipments to a near standstill.
Iranian attacks on oil tankers traveling through the Strait are the kind of scenario that led Western nations and their allies to create the IEA in 1974 in the wake of the Arab Oil Embargo. The agency, a club of Western nations and their allies, sets guidelines for how much crude member countries must keep in their reserves and coordinates releases to protect economies from oil market turmoil.
Since Feb. 28 when the U.S. and Israel first began their strikes on Iran, the price of oil has soared as much as 40%, breaching $100 before falling this week as traders closely track statements from President Trump on how long the war will last. Oil ended the day under $84, but the price of fuels such as diesel has continued to skyrocket.
Economists have warned that a sustained run-up in oil prices risks creating inflation and a stock market correction, in addition to pain at the pump for drivers.
IEA members hold 1.2 billion barrels in public stocks, plus another 600 million in mandatory commercial inventories, IEA Executive Director Fatih Birol said Monday. By rough calculation, that is around 124 days worth of lost supply from the Gulf.
Previous releases from strategic reserves have had mixed results.
IEA members did two releases in quick succession after Russia invaded Ukraine in early 2022. The move at first caused oil prices to rise 20% as traders saw the release as a sign the oil crisis was more serious than they had anticipated. Analysts say the releases eventually helped bring prices down.
A particularly successful release took place in 1991 when then-President George H.W. Bush prepared for Operation Desert Storm by ordering what was then the first ever drawdown of the Strategic Petroleum Reserve on the same night a U.S.-led coalition attacked Iraq. IEA members joined in releasing more oil from stockpiles in a plan they had put in place ahead of the invasion.
Prices fell more than 20% on the first day of the U.S.-led assault. By the time coalition forces entered Iraq and Kuwait in February, oil from the SPR was on the market.
Write to Matthew Dalton at Matthew.Dalton@wsj.com and Bojan Pancevski at bojan.pancevski@wsj.com