Oil futures are plunging as the International Energy Agency (IEA) said that the U.S. and 27 other nations will release a total of 60-million barrels of oil from strategic reserves.

In New York, oil futures are down about 5 percent in mid-morning trading.

This is only the third time in more than three decades that emergency stockpiles are being released and is prompted by the Libyan civil war which has reduced global output.

IEA tapped its reserves during the 1991 Persian Gulf War and just after Hurricane Katrina in August 2005.

Also, two weeks ago, the Organization of Petroleum Exporting Countries (OPEC) decided to keep output quotas unchanged despite a plea by Saudi Arabia to boost supply.

According to IEA, 2 million barrels a day will be released within the first 30 days.

Harry Tchilinguirian, head of commodity- markets strategy at BNP Paribas SA in London, told reporters: “The consumer-producer dialogue is going to run into some troubled waters. Stocks are only a short term bridge to supply outages. If Saudi is prepared to fill the gap, the need for a stock released is lessened. This reduces Saudi incentive to increase production.”