Oil climbed in another volatile trading session as escalating rhetoric from global leaders over the war in Iran outweighed an emergency release of crude reserves by wealthy nations.
West Texas Intermediate futures gained 4.6% to settle above $87 a barrel. Iran told regional intermediaries that for a ceasefire, the US must guarantee that neither it nor Israel will strike the country in the future. The US is unlikely to accept those terms, further diminishing already fading expectations that the war will end soon.
Trump said the US could strike even more targets in Iran “if we want,” just a day after insisting the operation is winding down. The European Union, meanwhile, called for continued enforcement of the price cap on Russian oil, tempering speculation that Moscow’s crude could flow more freely to global markets in the near term.
The developments limited bearish momentum after the International Energy Agency on Wednesday announced an unprecedented release of 400 million barrels, surpassing even the drawdown following Russia’s invasion of Ukraine. Many traders also remain wary of the lack of clarity surrounding US release plans, with Interior Secretary Doug Burgum saying in a CNBC interview that American participation would ultimately be up to the president.
“With 15 to 20 million barrels a day of Persian Gulf supply currently offline, the plan provides cushion for about a month,” said Pavel Molchanov, an analyst at Raymond James. “It’s a good start, though if the Iran conflict were to last beyond March, additional releases may be needed.”
The release highlights the tenuous state of the oil market after the war in the Middle East effectively halted shipping through the Strait of Hormuz — the narrow channel that typically handles a fifth of global crude flows — and led major Persian Gulf producers to cut output. Three vessels were hit with suspected projectiles in the region on Wednesday, as the conflict shows no signs of abating.
Some countries have begun to detail release plans. The UK is set to contribute 13.5 million barrels, while South Korea plans to release 22.46 million barrels from its strategic oil reserves.
Beyond the global release, Washington has floated a range of other creative measures to stem a sharp rise in energy prices. Trump is preparing to invoke the Defense Production Act to preempt state laws and ease permitting for Sable Offshore Corp., in a bid to boost domestic output with foreign barrels stranded overseas.
Oil prices have whipsawed lately over mixed messaging from the White House regarding the status of the war on Iran. Trump said in an Axios interview that the conflict will end “soon” because there is “practically nothing left to target.” Still, Israeli and US officials told the news outlet that they are preparing for at least two more weeks of strikes.
“The market is refocusing on the disrupted volume due to the Strait closure, and realizing the transit is still unsafe,” said Giovanni Staunovo, a commodity analyst at UBS Group AG.
Oil’s fluctuations continued a period of extreme market volatility this week that saw Brent prices reach almost $120 on Monday. West Texas Intermediate rose Wednesday to trade near $87.
Oil tumbled on Tuesday as the market grappled with rapidly shifting comments from the Trump administration about the war and shipping via Hormuz. Energy Secretary Chris Wright erroneously posted — and then deleted — a message that the US Navy had escorted an oil tanker through the strait near Iran, only for the White House to concede no operation had occurred.
There was also a flurry of conflicting social-media messages from Trump about mines in the strait. Trump is facing mounting economic and political pressure over the war, and late Monday said the conflict would be ending soon. However, US officials on Tuesday signaled military operations were escalating and there was little chance of diplomatic talks.
“It very much feels like a market trading in the fog of war, reacting in real time as events unfold,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “Traders continue to get whipsawed by intense price action and extreme volatility in crude, with headlines driving sharp intraday swings.”
The conflict in the Middle East, now into its second week, has drawn more than a dozen countries into the fray and has sparked concerns about an inflation crisis. US retail gasoline has jumped, putting additional pressure on Trump.
Saudi Arabia, Iraq, the United Arab Emirates and Kuwait have lowered their collective output by as much as 6.7 million barrels a day, or 6% of global output, Bloomberg reported on Tuesday. The biggest oil refinery in the UAE halted operations following a drone strike.
In the US, however, domestic inventories are rising. A government report Wednesday showed that US crude stockpiles rose by 3.8 million barrels last week, diverging from a closely followed industry report that had indicated a draw. Gasoline demand rose sharply, with the four-week average posting its largest increase since October 2024, in an indication that drivers are fueling up before prices climb even further.
Oil Prices
WTI for April delivery rose 4.6% to settle at $87.25 a barrel in New York.
Brent for May settlement added 4.8% to settle at $91.98 a barrel.
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