Oil prices fluctuated Wednesday as the Wall Street Journal reported the International Energy Agency (IEA) is proposing the largest release of oil reserves in history, a move intended to stabilize global markets amid escalating tensions in the Middle East. Brent crude futures initially rose 11 cents, or 0.13%, to $87.91 a barrel at 0129 GMT, while U.S. West Texas Intermediate (WTI) gained 7 cents, up 0.08% to $83.52 a barrel. Both benchmarks subsequently reversed course and declined following the publication of the WSJ report.
The proposed IEA drawdown is expected to exceed the 182 million barrels released in two phases in 2022, following Russia’s invasion of Ukraine, according to the WSJ, which cited officials familiar with the matter. Neither the IEA nor the White House immediately responded to requests for comment.
The potential release comes after a significant escalation of hostilities Tuesday, with the U.S. And Israel conducting what both the Pentagon and Iranian sources described as the most intense airstrikes of the conflict. Simultaneously, U.S. Central Command reported the destruction of 16 Iranian mine-laying vessels near the Strait of Hormuz. U.S. President Donald Trump has repeatedly warned that Iran must remove any mines placed in the vital shipping lane, and has stated the U.S. Is prepared to provide escorts for tankers transiting the Strait if necessary.
Though, sources indicate the U.S. Navy is currently declining requests from the shipping industry for military escorts, citing an unacceptable level of risk. Market analyst Tony Sycamore of IG in Sydney anticipates continued volatility, predicting crude oil will trade in a range between $75 and $105 per barrel in the coming sessions. Both Brent and WTI experienced a sharp decline Tuesday, falling more than 11% – the largest percentage drop since 2022 – after Trump signaled a potential swift resolution to the conflict, following a peak of $119 per barrel on Monday, a level not seen since June 2022.
G7 officials convened online to discuss a coordinated release of emergency oil stockpiles, while French President Emmanuel Macron is scheduled to host a video conference with other G7 leaders Wednesday to address the conflict’s impact on energy markets and potential mitigation strategies.
Disruptions to energy infrastructure are already materializing. Abu Dhabi National Oil Company (ADNOC) has temporarily shut down its Ruwais refinery following a fire at a facility within the complex, reportedly caused by a drone strike. Saudi Arabia, the world’s largest oil exporter, is increasing supplies via the Red Sea, though current volumes remain insufficient to fully offset the anticipated reduction in flows through the Strait of Hormuz, according to shipping data.
Energy consultancy Wood Mackenzie estimates the current conflict is curtailing Gulf oil and oil products supply by approximately 15 million barrels per day, potentially driving crude prices to $150 per barrel. Morgan Stanley analysts cautioned that even a rapid de-escalation will likely result in weeks of continued disruption to energy markets. U.S. Crude, gasoline, and distillate inventories fell last week, according to figures released Tuesday by the American Petroleum Institute, indicating increased demand.