- France will host the call of G7 leaders today
- US stocks of crude oil, gasoline and distillates fell.
- Brent futures rose 11 cents, or 0.13%, to $87.91 a barrel.
Oil prices swung Wednesday after the Wall Street Journal reported that the International Energy Agency proposed the largest release of oil reserves in its history to offset supply disruptions stemming from the war in Iran.
Brent futures were up 11 cents, or 0.13%, at $87.91 a barrel by 0129 GMT. US West Texas Intermediate (WTI) traded 7 cents higher and was last up 0.08% at $83.52 a barrel.
Both contracts fell immediately after the WSJ report, reversing WTI’s initial gains.
The IEA’s proposed reduction would exceed the 182 million barrels of oil that IEA member countries put on the market in two releases in 2022, when Russia launched its full-scale invasion of Ukraine, the WSJ he said, citing officials familiar with the matter.
The IEA and the White House did not immediately respond to Reuters‘ requests for comments.
The United States and Israel attacked Iran on Tuesday with what the Pentagon and Iranians on the ground called the most intense airstrikes of the war.
The US military also “removed” 16 Iranian ships laying mines near the Strait of Hormuz on Tuesday, US Central Command said, as US President Donald Trump warned that any mines placed in the Strait by Iran must be removed immediately.
Trump has repeatedly said the United States is prepared to escort oil tankers through the Strait of Hormuz when necessary. However, sources told Reuters that the US Navy has rejected the shipping industry’s requests for military escorts because the risk of attacks is too high for now.
“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 coming sessions,” Tony Sycamore, market analyst at IG in Sydney, said in a note.
Both contracts plunged more than 11% on Tuesday, the steepest percentage drop since 2022, a day after Trump predicted a quick end to the war, and after hitting a session high of more than $119 a barrel, their highest level since June 2022, on Monday.
G7 officials have since met online to discuss a possible release of emergency oil reserves to soften the blow to the market.
French President Emmanuel Macron will hold a video call with other leaders of G7 countries on Wednesday to discuss the impact of the conflict in the Middle East on energy and measures to address the situation.
Abu Dhabi’s state oil giant ADNOC has shut its Ruwais refinery in response to a fire at a facility within the complex following a drone attack, according to a source, marking the latest disruption to energy infrastructure due to the US-Israel war against Iran.
Saudi Arabia, the world’s biggest oil exporter, is expected to increase supplies through the Red Sea, although they are still well below levels needed to offset the drop in flows from the Strait of Hormuz, shipping data showed.
The kingdom relies on the Red Sea port of Yanbu to help it boost exports and avoid sharp production cuts as its neighbors Iraq, Kuwait and the United Arab Emirates have already reduced production amid the US-Israel war with Iran.
Energy consultancy Wood Mackenzie said the war is currently reducing supplies of Gulf oil and petroleum products to the market by about 15 million barrels a day, which could push crude prices to $150 a barrel.
“Even a quick resolution likely means weeks of disruption for energy markets,” Morgan Stanley said in a note.
Reflecting stronger demand, U.S. crude, gasoline and distillate stocks fell last week, market sources said, citing American Petroleum Institute figures on Tuesday.
