Oil prices rebounded early on Wednesday as the market fears a massive supply crunch from the ongoing blockage at the Strait of Hormuz, which offset reports that the IEA is preparing its largest-ever release from strategic oil stocks.
As of 6:31 a.m. EDT on Wednesday, the front-month Brent Crude futures prices moved above $90 per barrel again, having slumped to $88 at close on Tuesday. Brent was trading at $91.15, up by 3.80%.
The U.S. benchmark, WTI Crude, was up above $86 per barrel, at $86.86, after jumping by 4.10% so far on the day.
Prices had calmed for a few hours late on Monday and on Tuesday after the market apparently believed U.S. President Donald Trump’s comments that the war in Iran “is very complete, pretty much”.
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In addition, reports emerged that the International Energy Agency (IEA) proposed the largest-ever release of emergency stocks, of about 400 million barrels. This, if approved, would be more than double the 182 million barrels that IEA member states put on the market after Russia invaded Ukraine and priced spiked above $100 per barrel then, officials with knowledge of the matter told the Wall Street Journal.
On Tuesday, the International Energy Agency hosted a meeting of G-7 Energy Ministers in Paris to discuss the situation in the Middle East and potentially take measures to mitigate the fallout on the global oil market.
IEA Executive Director Fatih Birol said that the group discussed all available options to stabilize the market, including the possible release of emergency stockpiles held by IEA member countries.
On Wednesday, the market started panicking again about the huge supply of crude that cannot leave the Arab Gulf region, where OPEC’s top producers have already slashed crude output amid a lack of storage and blocked passage through the Strait of Hormuz.
By Tsvetana Paraskova for Oilprice.com
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