Crude jumps to $100 despite biggest oil reserve release ever
What's the story
Oil prices have spiked by over 8% on Thursday, with West Texas Intermediate (WTI) climbing 8.8% to $95 a barrel and Brent rising 8.88% to $100. The surge comes as traders doubt that emergency stock releases can counter the major supply shock from the ongoing Middle East war. The International Energy Agency (IEA) had announced its largest-ever emergency crude release, but market skepticism remains high.
Strategic reserves
IEA announces largest-ever emergency crude release
The IEA announced that its 32 member countries would release a total of 400 million barrels of oil from their strategic reserves. This is the largest coordinated drawdown since the agency was established after the 1973 oil embargo. The United States alone will contribute 172 million barrels from its Strategic Petroleum Reserve, with shipments possibly starting as early as next week and taking around 120 days to complete.
Supply concerns
Traders not convinced releases will be enough
Despite these measures, oil markets continued to rise as traders are not convinced that the releases would be enough if supplies through the Strait of Hormuz remain disrupted. The situation worsened after Iran warned that global oil prices could hit $200 per barrel following attacks on merchant ships. The conflict has already claimed around 2,000 lives and disrupted global energy markets and transport routes.
Distribution doubts
Iran sets conditions for ceasefire
The IEA's unprecedented move hasn't clarified how quickly individual countries will release their reserves or how the oil will be distributed. This uncertainty has added to market jitters. Iran has also set conditions for a ceasefire, including guarantees from the US and Israel against future attacks, recognition of its rights, and reparations for war damages. However, reports suggest that Washington is unlikely to accept these terms.