London (AFP) – A record release of oil from strategic reserves by IEA nations failed to ease concerns about the impact from the Middle East war, with crude prices pushing further higher and stocks sliding on Wednesday. The move to release oil stocks came as Iran said it was ready for a long war of attrition that would “destroy” the world economy, after firing on two commercial ships and threatening any vessels from the US or its allies.
The International Energy Agency announced its member countries would unlock 400 million barrels of oil from their reserves to ease the impact from a lack of supplies transiting through the Strait of Hormuz. Tehran has retaliated to US and Israeli attacks that began on February 28 by attacking targets across the oil-rich Gulf and effectively shutting down the crucial Strait of Hormuz, through which nearly 20 percent of the world’s oil usually transits to world markets.
Despite the IEA announcement, oil prices added to gains. While it may be a record reserves release, it still only replaces part of the lost supplies, noted analyst Helge Andre Martinsen at DNB Carnegie. He estimated that releases from strategic reserves could total 1.75 million barrels per day, while lost supply is approximately 11 million barrels per day of crude and around four million barrels per day of oil products. “Hence, it will help, but it won’t make a massive difference for the very short-term global oil balance,” he said.
Equity markets were not reassured either. Wall Street was mostly lower in afternoon trading and European markets closed in the red. “With the IEA’s record oil reserves release unable to push prices lower today, this is keeping risk appetite downbeat, with stock markets struggling and currencies of oil importing regions lower,” said Forex.com analyst Fawad Razaqzada.
Fears that the conflict could drag on – choking off energy supplies – sent both main crude contracts soaring on Monday to within a whisker of $120 a barrel, the highest since 2022. Natural gas prices also rocketed. Prices dropped on Tuesday after US President Donald Trump said the war was “going to be ended soon,” before turning higher again. “Markets are likely to grow increasingly fearful over the long-term implications with each day that passes,” said Joshua Mahony, chief market analyst at Scope Markets.
Forex.com’s Razaqzada said the markets were paying attention to Iran’s warnings to disrupt oil flows and a reported shift to continued attacks from retaliatory strikes. Such a move “suggests the conflict could intensify rather than cool,” he said. New attacks hit three commercial ships in the Gulf on Wednesday, officials said, leaving one vessel in flames as Iran pressed its campaign against its oil-exporting neighbours.
Sentiment was also dampened by US group Citi, consultancies Deloitte and PwC, and other firms in Dubai, which closed offices or asked employees to evacuate Wednesday after Iran threatened US and Israel-linked economic assets in the Middle East. The evacuations at the heart of the Middle East’s financial hub come as the Gulf, but especially the UAE, has borne the brunt of Iran’s attacks in response to US-Israeli strikes.
– Key figures at around 1630 GMT –
Brent North Sea Crude: UP 5.6 percent at $92.74 per barrel
West Texas Intermediate: UP 5.5 percent at $88.03 per barrel
New York – Dow: DOWN 0.9 percent at 47,292.13 points
New York – S&P 500: DOWN 0.3 percent at 6,764.60
New York – Nasdaq Composite: FLAT at 22,695.84
London – FTSE 100: DOWN 0.6 percent at 10,353.77 (close)
Paris – CAC 40: DOWN 0.2 percent at 8,041.81 (close)
Frankfurt – DAX: DOWN 1.4 percent at 23,640.03 (close)
Tokyo – Nikkei 225: UP 1.4 percent at 55,025.37 (close)
Hong Kong – Hang Seng Index: DOWN 0.2 at 25,898.76 (close)
Shanghai – Composite: UP 0.3 percent at 4,133.43 (close)
Euro/dollar: DOWN at $1.1574 from $1.1612 on Tuesday
Pound/dollar: DOWN at $1.3407 from $1.3415
Dollar/yen: UP at 158.81 yen from 158.06 yen
Euro/pound: DOWN at 86.33 pence from 86.48 pence
© 2024 AFP
