Germany will tap strategic oil stocks and cap daily fuel price hikes as global markets react to Middle East conflict and potential Hormuz Strait closure.

BERLIN: Germany will release part of its strategic oil reserve to help stabilise soaring global energy costs triggered by war in the Middle East.

Economy and Energy Minister Katherina Reiche announced the move, stating Germany would comply with an International Energy Agency request for member states to release 400 million barrels.

“We will comply with this request and make our contribution,” Reiche told a press conference in Berlin.

The release involves 2.4 million tons from Germany’s total reserves of approximately 19.5 million tons.

Reiche also announced a new rule limiting petrol stations to just one fuel price increase per day, though reductions can occur at any time.

This measure aims to prevent rapid price spikes at the pump from being followed by slower declines, a pattern observed in past energy crises.

“The markets are clearly reacting with extreme sensitivity at present because no one knows how long the Strait of Hormuz will remain impassable,” Reiche said.

Iran has vowed to close the vital Hormuz Strait to shipping from countries it considers allied with the United States and Israel.

The strait normally carries about 20% of the world’s oil and gas supplies, and its potential closure has caused major market volatility.

Oil prices surged more than 5% in early trading, continuing the see-saw pattern seen since the US and Israel attacked Iran late last month.

While Germany’s gas supply remains secure via Norwegian and US sources, Reiche described the global oil supply situation as “tense”.

This marks the fourth time Germany has tapped its strategic reserve, following releases during the 1990-91 Gulf War, after Hurricane Katrina in 2005, and during the 2011 Libya war.

The IEA requires members to maintain oil reserves equivalent to at least 90 days of net imports.

 The Sun Malaysia