IEA oil release could exceed 182m barrels deployed after Russia’s 2022 Ukraine invasion, reports WSJ
France will host a call between leaders of the Group of Seven later today to discuss the ongoing global situation.
Meanwhile, inventories of crude oil, gasoline, and distillate fuel in the United States have declined, signalling tighter supply conditions.
In the oil market, Brent crude futures edged higher by 11 cents (0.13%) to trade at $87.91 per barrel.
Oil prices saw significant swings on Wednesday after the Wall Street Journal reported that the International Energy Agency (IEA) has proposed the largest release of oil reserves in its history to counter supply disruptions caused by the ongoing conflict in Iran.
Brent crude futures rose 11 cents, or 0.13%, to $87.91 per barrel at 0129 GMT, while US West Texas Intermediate (WTI) gained 7 cents, up 0.08%, trading at $83.52 per barrel. Both contracts had initially dropped immediately after the WSJ report, reversing early gains in WTI.
The proposed IEA release would exceed 182 million barrels that member countries injected into the market during two emergency releases in 2022, following Russia’s full-scale invasion of Ukraine, the WSJ reported, citing officials familiar with the matter. Neither the IEA nor the White House responded immediately to Reuters requests for comment.
The situation escalated on Tuesday as the US and Israel conducted what the Pentagon and Iranian sources described as the most intense airstrikes of the war. The US military also reportedly “eliminated” 16 Iranian mine-laying vessels near the Strait of Hormuz, according to US Central Command. Donald Trump has warned that any mines placed in the Strait by Iran must be removed immediately and has repeatedly stated that the US is ready to escort tankers through the waterway if necessary. However, sources told Reuters that the US Navy has declined requests from the shipping industry for military escorts, citing high risks.
Market analysts expect continued volatility. “We continue to expect crude oil to remain highly volatile, driven by headlines while trading within a wide range between $75 and $105 in the sessions ahead,” said Tony Sycamore, market analyst at IG in Sydney. Both Brent and WTI contracts plunged more than 11% on Tuesday, marking the steepest single-day drop since 2022, after surging above $119 per barrel on Monday.
G7 officials have convened online to discuss a potential release of emergency oil stockpiles to mitigate market shocks. Emmanuel Macron will host a video call with other G7 leaders on Wednesday to review the conflict’s impact on energy and explore measures to stabilize the market.
Energy infrastructure has also been affected. Abu Dhabi National Oil Company (ADNOC) shut its Ruwais refinery after a fire at a facility within the complex, reportedly caused by a drone strike. Meanwhile, Saudi Arabia is attempting to boost exports via the Red Sea, though shipments remain below the levels needed to compensate for supply cuts from the Strait of Hormuz. The kingdom is relying on its Yanbu port to increase output, as neighbors Iraq, Kuwait, and United Arab Emirates have already reduced production due to the conflict.
Energy consultancy Wood Mackenzie estimates that the war has cut Gulf oil and products supply by around 15 million barrels per day, potentially pushing crude prices toward $150 per barrel. Morgan Stanley noted that even a quick resolution would likely mean weeks of disruption for energy markets.
Meanwhile, US stocks of crude oil, gasoline, and distillate fuel fell last week, according to the American Petroleum Institute, reflecting higher demand amid the escalating tensions.
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