Oil prices remain below $90 but WTI crude resumes rally

Oil prices were volatile early on Wednesday despite reports that there would be a historic release of emergency reserves from the International Energy Agency.

As of 2:37 am ET, the global standard Brent is raw Futures were at $87.75 a barrel US crude oil It gained 0.7% to trade at around $84 a barrel.

On Tuesday, G7 energy ministers met in Paris to discuss the US-Iran war and its impact on global oil and gas markets. The conflict has disrupted energy production in the Middle East and led to a blockade of the critical shipping lane, the Strait of Hormuz.

The Wall Street Journal The IEA has proposed the biggest release of oil from its strategic reserves since Russia’s full-scale invasion of Ukraine in 2022, surpassing the 182 million barrels its member countries put on the market, the IEA reported Tuesday evening. Countries will decide on Wednesday whether to release emergency oil stocks.

The IEA did not immediately respond to CNBC’s request for comment.

In a statement on Tuesday, IEA Executive Director Fatih Birol said member countries currently hold 1.2 billion barrels of public emergency oil stocks, with another 600 million barrels of industry stocks held under government obligation.

“In the oil markets, conditions have worsened in recent days,” Birol said, pointing to transportation challenges and substantial cuts in oil production.

“This is creating significant and growing risks for the market,” he said. “We have discussed all available options, including making the IEA emergency oil stocks available to the market.”

On Tuesday, oil prices fell sharply after a post on US Energy Secretary Chris Wright’s social media account falsely claimed that the US Navy had escorted a tanker through the Strait of Hormuz.

White House Press Secretary Caroline Leavitt later told reporters that the US Navy “has not escorted the tanker or the ship at this time.”

“We really think that the decisive factor remains the duration of the war, so these releases of the IEA’s stocks will really buy us a few days, but in reality, it depends on the opening of the Strait of Hormuz,” Sasha Foss, energy market analyst at Marex, told CNBC’s “Europe Early Europe” on Wednesday.

“This conflict should end by the end of the week. If not, we will see oil prices rise above $100,” Foss said.

Other market observers have warned that conflict between the US and Iran could push oil back above the $100 threshold.

“If tensions ease in the coming weeks, oil prices could retreat … but even in that scenario, prices are unlikely to return to the $60-$70 range seen earlier this year,” Paul Gooden, head of global natural resources at Ninety One, said in a note on Tuesday.

“The longer the disruption continues, the more significant the effects will be. Oil prices could rise further — potentially to $120 or more — until higher prices begin to suppress demand.”