Oil prices surged over 8 per cent on Thursday as traders remained unconvinced that emergency stock releases would be enough to offset the severe supply shock caused by the ongoing war in the Middle East.
West Texas Intermediate surged 8.8 per cent to $95 a barrel, while Brent jumped 8.88 per cent to $100, shrugging off the International Energy Agency’s largest-ever emergency crude release.
The IEA said on Wednesday that its 32 member countries would collectively release 400 million barrels of oil from strategic reserves, marking the biggest coordinated drawdown since the agency was formed after the 1973 oil embargo.
The United States said it would contribute 172 million barrels from its Strategic Petroleum Reserve. Energy Secretary Chris Wright said shipments could begin as early as next week and may take about 120 days to complete.
Despite these measures, oil markets continued to move higher as traders remained skeptical that the releases would be enough if supplies through the Strait of Hormuz remain disrupted.
Concerns intensified after Iran warned that global oil prices could climb to $200 per barrel after its forces struck merchant ships on Wednesday. The conflict, triggered by joint US and Israeli airstrikes nearly two weeks ago, has killed around 2,000 people so far, most of them in Iran and Lebanon. The fighting has since spilled into Lebanon and disrupted global energy markets and transport routes.
On Wednesday, three vessels were reported to have been hit in Gulf waters after Iran’s Revolutionary Guards said their forces had fired on ships in the Gulf that had disobeyed their orders.
US President Donald Trump, who has not committed to a timeline for military operations, said on Wednesday that he was not yet ready to call an end to the war. Uncertainty over how quickly the additional oil will reach the market has also weighed on sentiment. While the IEA’s move represents an unprecedented intervention, the agency did not specify the pace at which individual countries will release their reserves or how the oil will be distributed.
Concerns over a prolonged conflict are also overshadowing the IEA’s move. Iran has told regional intermediaries that any ceasefire would require the US to guarantee that neither it nor Israel will carry out future attacks on the country, recognise Iran’s rights, and fund reparations for the damage caused during the war. However, Bloomberg reported that Washington is unlikely to accept these conditions.
