- Crude oil prices fall as IEA considers emergency reserve release
- Crude oil prices react to US Iran war and Hormuz tensions
Crude oil prices dipped below the $90 mark on Wednesday after reports said the International Energy Agency may release emergency reserves. The proposed move aims to cool the sharp surge in energy prices linked to the ongoing US Iran war. As a result, markets reacted quickly and oil benchmarks declined.
According to reports, the International Energy Agency is considering the largest release of emergency reserves in its history. The plan would exceed the 182 million barrels released in two phases in 2022 after Russia’s invasion of Ukraine. Meanwhile, the Group of Seven nations have asked the IEA to prepare scenarios for such a step.
Brent crude oil price fell 0.99 per cent to $86.93 per barrel. At the same time, US West Texas Intermediate futures dropped 0.75 per cent to $82.82. Overnight, both oil futures had already settled more than 11 per cent lower. This marked the steepest single day decline in four years.
However, the recent volatility followed a strong rally in oil prices earlier this year. Brent crude prices had surged nearly 50 per cent since January. The rise happened after the closure of the Strait of Hormuz, a key maritime route for global oil transport. The strategic waterway handles nearly one fifth of global oil flows.
The closure created severe disruptions across the energy market. Tankers were left stranded and storage capacity quickly filled up. As a result, several producers reduced output. These developments pushed energy costs higher in many markets around the world.
Earlier this week, oil prices had briefly approached the $120 level. However, they later retreated as traders reacted to comments from US President Donald Trump. He suggested that the conflict between the United States and Iran could end soon.
Meanwhile, the US Iran war has entered its second week with no clear resolution. President Donald Trump also issued a warning to Iran over possible mines in the Strait of Hormuz.
“If Iran has put out any mines in the Hormuz Strait, and we have no reports of them doing so, we want them removed, immediately!” President Trump posted Tuesday on social media, adding that removing the mines would be “a giant step in the right direction!”
The economic impact of the conflict is already visible in the United States. Gasoline prices have begun rising sharply. Therefore, lawmakers in the US have introduced legislation to temporarily suspend the federal gasoline tax. The proposal aims to reduce the burden on households facing higher fuel costs.
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