Oil Swings as Traders Weigh War Disruptions Against IEA Reserve-Release Plan
Oil prices whipsawed in another volatile session as traders assessed whether an emergency crude release by wealthy nations can soften the impact of escalating supply disruptions in the Middle East.
The International Energy Agency (IEA) announced an unprecedented release of 400 million barrels on Wednesday—bigger than the drawdown that followed Russia’s invasion of Ukraine—briefly pushing oil prices into negative territory intraday. U.S. Interior Secretary Doug Burgum said the timing for a potential release was “perfect,” while Japan moved ahead with its own release plan.
Markets have been trading “headline to headline” amid mixed messages from the White House on the war’s trajectory. President Donald Trump said in an Axios interview that the conflict will end “soon” because there is “practically nothing left to target.” However, U.S. and Israeli officials said they are preparing for at least two more weeks of strikes.
The reserve release highlights just how tense the oil market has become after the war effectively halted shipping through the Strait of Hormuz—a narrow channel that typically carries about one-fifth of global crude flows—and forced major Persian Gulf producers to cut output. Three vessels were hit by suspected projectiles in the region on Wednesday, underscoring that hostilities show little sign of easing.
“The market is refocusing on the disrupted volume due to the Strait closure, and realizing the transit is still unsafe,” said Giovanni Staunovo, a commodity analyst at UBS.
Brent traded higher near $91 a barrel after flipping between gains and losses earlier in the session. The swings extend a week of extreme volatility that saw prices approach $120 on Monday.
Oil tumbled on Tuesday as traders grappled with rapidly shifting commentary from the Trump administration about the war and shipping through Hormuz. Energy Secretary Chris Wright mistakenly posted—and later deleted—a claim that the U.S. Navy had escorted an oil tanker through the strait, before the White House conceded no such operation had taken place. Conflicting social-media messages from Trump added to the volatility.
“It very much feels like a market trading in the fog of war, reacting in real time as events unfold,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “Traders continue to get whipsawed by intense price action and extreme volatility in crude, with headlines driving sharp intraday swings.”
Now in its second week, the conflict has drawn more than a dozen countries into the fray and revived fears of an inflation shock. U.S. retail gasoline prices have jumped, adding economic and political pressure on Trump. Bloomberg reported Tuesday that Saudi Arabia, Iraq, the United Arab Emirates and Kuwait have reduced combined output by as much as 6.7 million barrels a day—about 6% of global output—and the UAE’s largest refinery halted operations after a drone strike.
Saudi Aramco CEO Amin Nasser warned that the longer the disruption persists, the more “catastrophic” the consequences could be for the global oil market and the broader economy.
Prices (latest):
WTI (April) rose 3.1% to $86.04 a barrel (10:23 a.m. New York)
Brent (May) added 3.4% to $90.82 a barrel
