Oil prices are rising despite the International Energy Agency agreeing to release a record number of barrels into the market in order to stabilise prices.
The IEA will release 400 million barrels of oil from its emergency reserves, the largest ever release on record, surpassing the near-200 million barrels that were released back in 2022 to combat prices during the Russia-Ukraine war. However, the IEA has not shared any specific timeline as to when the barrels will hit the market with IEA’s executive director Fatih Birol emphasizing that tanker traffic must resume through the Strait of Hormuz to restore stability.
Analysts believe that the IEA decision does not do much to address the other problems that the global economy would face. Most of the refined products, including Jet fuel, still flow through the Strait of Hormuz, where tanker traffic has all but halted, as acknowledged by Birol as well.
Additionally, concerns over a prolonged war are outweighing the IEA’s decision. Iran has told its regional intermediaries that for a ceasefire to happen, the US must guarantee that neither it, nor Israel will attack the country in the future, recognise their rights, and pay for reparation work in the country. Bloomberg reported that Washington is unlikely to accept those norms.
US President Donald Trump also welcomed the IEA’s decision and hinted at tapping the US Strategic Petroleum Reserve to support prices. Trump will release 172 million barrels of oil from the SPR, which currently stands at 415 million barrels and at just over 50% of its overall capacity.
Three vessels being hit by projectiles in the Strait of Hormuz and in the Persian Gulf has continued to add to uncertainties and danger for vessels in or wanting to transit through the region.
(With Inputs From Agencies)
