"Likely everyone is reading the news and understands that we are dealing with a global crisis," said Ando Leppiman, head of the Estonian Stockpiling Agency.

"The price reacts immediately, of course, and that is why it is reasonable to put these reserves into use. That is precisely why the reserve was created," said Rein Vaks, head of the energy department at the Ministry of Climate.

As tankers are no longer passing through the Strait of Hormuz, several refineries that produce gasoline or diesel from crude oil will soon also cease operations. To prevent a potential fuel shortage, countries of the International Energy Agency (IEA) decided together last week to release their oil reserves.

"A decision has been made to release 400 million barrels of petroleum products — whether as finished products or as crude oil — over the next 90 days," Vaks said.

"Since Estonia is an IEA member state, a situation may arise where, to alleviate this global supply disruption and crisis, IEA countries come together and determine that fuel reserves should be released," Leppiman said.

"In Asian countries, there is a serious shortage of molecules and such a collective and solidarity-based decision by member states to use these reserves will certainly help significantly alleviate that shortage in Asia," Vaks added.

Simply put, a "molecule shortage" means there is no crude oil available to process. The fact that the shortage is emerging in Asia is no coincidence, as countries there consume oil from the Persian Gulf. In the event of a shortage, they will purchase oil elsewhere, which in turn drives up prices at gas stations here as well. To counter this, the Estonian Stockpiling Agency, together with other countries, has released its strategic fuel reserves onto the open market.

The Estonian Stockpiling Agency ensures that the country has sufficient gasoline, diesel and natural gas, as well as aviation fuel. However, it does not need to stockpile marine fuel, as Estonia's oil shale industry produces that domestically. The gasoline and diesel used daily by Estonian drivers have been stored for years at a massive liquid fuel terminal in Muuga.

"Estonia is a fuel-importing country. We do not produce fuel ourselves — we do not have refineries where we could produce gasoline, diesel or aviation fuel. Because we are an importing country, that is precisely why these fuel reserves are so large — not only due to legislation, but also out of practical necessity," Leppiman said.

Each of the large storage tanks holds up to 10,000 metric tons of fuel. That amount is enough to fill at least 277,000 standard passenger car fuel tanks.

At Muuga Harbor, as well as elsewhere in Estonia, the country holds fuel reserves for 90 days. Why exactly 90 days? The reason lies in the 1973 oil crisis, which was also centered in the Middle East — specifically the events of the Yom Kippur War. At the time, Arab countries declared war on Israel and threatened an oil embargo against those who supported it.

"At that time, oil-consuming countries decided to create a joint organization to counter potential market manipulation or pressure from oil-producing countries. From that point on, it was determined that a reasonable level would be a 90-day, or three-month, consumption reserve," Leppiman said.

As of early March, Estonia has a total of 51,000 metric tons of gasoline in reserve. That is enough to fill nearly 1.4 million passenger car fuel tanks. There is nearly four times as much diesel fuel, which is widely used in road transport. In addition to Estonian fuel companies, foreign companies can also purchase it — and vice versa.

"Consumers should not be concerned about whether they can access or purchase fuel at gas stations. On the other hand, they do not need to be aware that the fuel sold at stations may originate from state reserves. For consumers, the process remains the same — they go to a gas station and buy fuel," Leppiman said.

Who paid for this massive stockpile of fuel? The answer is car owners themselves.

"All fuel consumers who go to gas stations pay a very small portion of the fuel price as a storage fee. The state and the Stockpiling Agency aim to keep this fee as low as possible," Leppiman said.

In other words, every time you refuel your car, you are indirectly paying a strategic reserve fee — approximately 20 cents per 50-liter tank. This is not listed on the receipt at the gas station, but for example, households using natural gas can find this charge on their network fee bill.

When Estonia's fuel reserves are deployed, they are not replenished immediately. Instead, a tanker typically arrives at the loading quay only months later to refill them — primarily due to pricing considerations.

"When reserves are used, replenishing them should not itself create a new crisis. There must be a reasonable interval," Leppiman said.

"It is more sensible to repurchase these reserves in the fall, when the market situation will likely have stabilized. There is no point in driving up demand further by having member states all restock at once. At present, we expect the situation to calm down by autumn," Vaks said.

"We have experience from early 2022, during the war in Ukraine, when reserves were released. Estonia participated in a joint IEA action at the time, releasing 15,000 metric tons of fuel onto the open market. The replenishment took place in the fall — about a six-month gap," Leppiman said.

Just a few years ago, a large portion of Estonia's reserves was stored abroad, but the war and subsequent energy crisis forced a policy shift.

"The outbreak of the large-scale war in Ukraine was the reason why these reserves began to be built up and brought into Estonia in significant volumes," Leppiman said.

Still, maintaining a portion of reserves abroad remains sensible from a security standpoint.

Currently, about 88 percent of Estonia's reserves are located within the country, though reserves belonging to several other countries are also stored here — their quantities and locations are not disclosed. In light of the situation involving Iran, however, the question arises whether a fuel shortage could be on the horizon.

"Throughout this crisis, the Stockpiling Agency has remained in constant contact with fuel market participants and importers. Our question is quite simple: do you foresee any problems with fuel supplies — whether at refineries or elsewhere? So far, the answer has consistently been that all supplies are secured and there is no acute issue with supply security at present. That does not mean problems could not arise, which is why the state maintains operational reserves," Leppiman said.

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