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As a significant share of global crude flows at risk, the International Energy Agency (IEA) is reportedly discussing a coordinated release of emergency oil reserves among member countries to stabilize markets. Such actions are typically deployed when major supply disruptions threaten global energy security.
The release of emergency oil reserves by countries coordinated through the IEA can add temporary supply to the market and prevent a sharp spike in oil prices.
On Japan’s front, the Ministry of Economy, Trade and Industry has instructed domestic oil storage bases to prepare for release as the Iran crisis has cut supply from the Middle East. Interviews with oil refiners will also be conducted to assess domestic supply and demand.
Qatar’s Energy Minister Saad al-Kaabi said that the country expects all Gulf energy producers to shut down exports within weeks and drive oil to $150 a barrel, the Financial Times reported on Friday. The energy disruption continues to become more widespread. It is being reported that Bahrain’s major oil refinery was struck by an Iranian drone attack. This is one of the oldest and most strategic energy hubs in the region.
Meanwhile, the United Arab Emirates (UAE) and Kuwait started reducing oil production as the closure of the Strait of Hormuz ripples through energy markets and affects global supply. Additionally, Saudi Arabia’s Defense Ministry stated that state-controlled Saudi Aramco’s Ras Tanura loading terminal and refinery complex was targeted by an Iranian drone Wednesday. A wider conflict in the Middle East and cut crude oil output boost the WTI price above $100 per barrel, the first time in four years.
Market reaction
At the time of writing, the West Texas Intermediate (WTI) is up 14.00% on the day at $100.92, reversing sharply from over three-year highs of $113.28 reached earlier in the Asian session.
