Crude oil prices lowered on hopes that the International Energy Agency could release the largest-ever release of oil reserves, exceeding the 182 million barrels released in 2022 after Russia’s invasion of Ukraine.
Oil prices remained well below the peaks reached earlier this week as concerns in energy markets showed signs of easing.
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Sentiment was supported by the proposal of the International Energy Agency (IEA) to release a record amount of oil reserves to help offset a global supply shock.
Early morning on Wednesday, Brent crude – the international benchmark – was up by 0.2%, costing nearly $88 a barrel, after prices briefly surged towards $120 on Monday.
US benchmark crude also edged higher, gaining 0.7% to $84 a barrel.
According to reports, the IEA proposal would exceed the 182 million barrels released in 2022 after Russia’s invasion of Ukraine. The agency’s 32 member countries are expected to vote on the plan on Wednesday.
At an extraordinary meeting of IEA Member governments, members will "assess the current security of supply and market conditions to inform a subsequent decision on whether to make emergency stocks of IEA countries available to the market," said IEA Executive Director Fatih Birol on meeting of G7 Energy Ministers at IEA headquarters in Paris on Tuesday.
IEA member countries hold more than 1.2 billion barrels of public emergency oil stocks, along with around 600 million barrels held by industry under government obligations.
Oil prices had surged earlier in the week amid fears that the conflict involving Iran could disrupt global energy supplies and damage the world economy.
Prices eased later on Monday after US President Donald Trump said the war could be short-lived and suggested Washington might waive some oil-related sanctions to ease pressure on markets.
However, tensions in the region remain high. Israel and Iran exchanged fire early on Wednesday, while Tehran continued attacks targeting shipping and energy infrastructure.
Iran has effectively halted traffic through the Strait of Hormuz, a narrow waterway through which roughly a fifth of the world’s oil passes each day.
“This key chokepoint carries around 20% of global oil flows daily, and with storage facilities beginning to fill, some oil field production is already being curtailed,” said Sasha Foss, energy analyst at CSC Commodities, a division of Marex.
Analysts at Wood Mackenzie estimate that about 15 million barrels of petroleum exports have been removed from the global market.
