Oil prices fell in Asian trade on Wednesday after the Wall Street Journal reported the International Energy Agency was planning its largest ever emergency oil reserve release to offset the impact of the Iran war.
Brent oil futures for May fell nearly 1% to $86.93 a barrel, while West Texas Intermediate crude futures fell 0.5% to $83.07 a barrel by 00:55 ET (05:55 GMT). Oil prices swung wildly in the minutes following the WSJ report, before steadily trending lower.
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IEA plans largest ever reserve release amid Iran turmoil The WSJ reported that the IEA had proposed releasing a record amount of oil, with member countries set to consider the proposal on Wednesday.
The emergency reserve release is expected to be larger than the record 182 million barrels of oil released in 2022, during the onset of the Russia-Ukraine war.
The IEA release is aimed at countering increased disruptions in oil markets caused by the near complete closure of the Strait of Hormuz by Iran. The strait is a key shipping lane that facilitates about 20% of the world’s oil supply.
A massive IEA release could help limit some supply disruptions stemming from the U.S.-Israel war with Iran. But an extended closure in the Strait of Hormuz stands to severely disrupt oil and gas supplies to several parts of Asia.
Reports showed Iran attacking ships passing through the Strait this week, and that Tehran had also mined the channel.
Iran has signaled that it will allow passage through the Strait only after U.S. and Israeli attacks against the country are stopped.
Reports earlier this week showed the Group of Seven countries were also planning oil reserve releases to help offset supply shortages. Additionally, the U.S. said it was temporarily lifting some sanctions on the sale of Russian oil to improve crude supplies.
Markets parse conflicting signals on Iran war Oil prices rose to nearly $120 a barrel earlier this week, amid concerns over supply disruptions in the Middle East. But they swiftly trimmed these gains on reports of more reserve releases and other measures to help limit the supply impact, with crude prices remaining volatile.
Oil markets were also grappling with conflicting signals on the Iran war. U.S. officials claimed in a now deleted social media post on Tuesday that the navy had successfully escorted an oil tanker through the Strait of Hormuz.
But the post was denied by the White House, with other reports indicating that the navy was reluctant to escort any ships in the region, given the high risk involved.
Oil prices had swung wildly on the post, sliding as low as $81 before rebounding after its deletion.
Earlier in the week, U.S. President Donald Trump said the war was close to ending. But Iran rejected his comments, while hostilities with the Islamic Republic showed few clear signs of easing.
