Oil prices jump despite strategic reserve release / Photo: © AFP/File
Oil prices jump despite strategic reserve release
A record release of oil from strategic reserves by IEA nations failed to ease concerns about the impact from the Middle East war, with crude prices pushing further higher and stocks sliding.
The International Energy Agency said Wednesday its member countries would unlock 400 million barrels of oil from their reserves to ease the impact from a lack of supplies transiting through the Strait of Hormuz.
Tehran has retaliated to US and Israeli attacks that began on February 28 by attacking targets across the oil-rich Gulf and effectively shutting down the crucial Strait of Hormuz, through which nearly 20 percent of the world's oil usually transits to world markets.
Despite the IEA announcement oil prices added to gains following the announcement.
While the reserves release may be record, it only replaces part of the lost supplies, noted analyst Helge Andre Martinsen at DNB Carnegie.
He estimated that releases from strategic reserves could total 1.75 million barrels per day, while lost supply is approximately 11 million barrels per day of crude and around four million barrels per day of oil products.
"Hence, it will help, but it won't make a massive difference for the very short-term global oil balance," he said.
Equity markets were not reassured either, with Wall Street and European markets trading lower.
"With the IEA's record oil reserves release unable to push prices lower today, this is keeping risk appetite downbeat, with stock markets struggling and currencies of oil importing regions lower," said Forex.com analyst Fawad Razaqzada
- Oil volatility -
Fears that the conflict could drag on -- choking off energy supplies -- sent both main crude contracts soaring on Monday to within a whisker of $120 a barrel, the highest since 2022. Natural gas prices also rocketed.
However, prices tanked on Tuesday after US President Donald Trump said the war "going to be ended soon".
"Markets are likely to grow increasingly fearful over the long-term implications with each day that passes," said Joshua Mahony, chief market analyst at Scope Markets.
"Oil prices remain the main driver of market sentiment," he added.
The release of oil from strategic reserves could be interpreted by the markets as indication of concern by policymakers about the gravity of the situation and they expect the conflict to continue.
Forex.com's Razaqzada said the markets are paying attention to Iran's warnings to disrupt oil flows and a reported shift to continued attacks from retaliatory strikes.
Such a move "suggests the conflict could intensify rather than cool", he said.
New attacks hit three commercial ships in the Gulf on Wednesday, officials said, with one vessel left in flames as Iran pressed its campaign against its oil-exporting neighbours.
Announcements by British consulting group Deloitte to close their Dubai office and PwC to close offices in several Gulf countries also dampened sentiment.
- Key figures at around 1545 GMT -
Brent North Sea Crude: UP 4.4 percent at $91.67 per barrel
West Texas Intermediate: UP 4.4 percent at $87.13 per barrel
New York - Dow: DOWN 1.0 percent at 47,240.22 points
New York - S&P 500: DOWN 0.4 percent at 6,753.28
New York - Nasdaq Composite: DOWN 0.2 percent at 22,647.60
London - FTSE 100: DOWN 0.9 percent at 10,322.98
Paris - CAC 40: DOWN 0.5 percent at 8,018.24
Frankfurt - DAX: DOWN 1.6 percent at 23,583.50
Tokyo - Nikkei 225: UP 1.4 percent at 55,025.37 (close)
Hong Kong - Hang Seng Index: DOWN 0.2 at 25,898.76 (close)
Shanghai - Composite: UP 0.3 percent at 4,133.43 (close)
Euro/dollar: DOWN at $1.1574 from $1.1612 on Tuesday
Pound/dollar: DOWN at $1.3402 from $1.3415
Dollar/yen: UP at 158.80 yen from 158.06 yen
Euro/pound: DOWN at 86.36 pence from 86.48 pence
burs-rl/jj
P.Jones--TNT
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