Oil prices were on the rise on Thursday despite the IEA ordering the release of 400 million barrels of reserves onto the market.
The IEA oil reserve release was one of the very few tools available to stabilise oil markets. And it doesn’t seem to have had the desired effect.
Brent Crude rose above $100 in Asian trading, undermining the impact of the IEA’s decision to release the reserves. Brent was trading at $97.24 at the time of writing, with WTI at $92.23.
“The market reassurances seen early this week through the bet on US administration intervention to stabilise oil supply seem to have exhausted their impact rapidly,” said Ahmad Assiri, Research Strategist at Pepperstone.
“The pricing of risks regarding navigation disruptions in the Strait of Hormuz has returned to dominate trading screens, revealing a fundamental divergence in perspectives.”
Iran has continued attacks in the region and is showing no sign of allowing free movement through the Strait of Hormuz any time soon.
Linh Tran, Market Analyst at XS.com, said: “If the conflict continues, the risk of disruptions to energy supplies from the Middle East is likely to remain elevated, particularly regarding oil shipments through the Strait of Hormuz, a key chokepoint that carries roughly 20% of global oil supply.
“In this environment, geopolitical risks continue to be reflected in oil prices, helping maintain elevated levels in the near term.”
With multiple oil facilities ablaze across the region, traders have little reason to expect the crisis will subside before it deepens.