Oil prices fell in early Asian trading on Wednesday after a report said the International Energy Agency (IEA) is planning a large-scale release of emergency oil reserves to stabilize energy markets shaken by the Iran war.
Brent oil futures for May delivery fell 0.5% to $87.37 a barrel. Meanwhile, West Texas Intermediate (WTI) crude futures fell 0.4% to $81.78 a barrel.
Oil prices initially moved sharply after the report was published before returning to a downward trend.
According to a report by the Wall Street Journal, the IEA is proposing the largest release of emergency oil reserves in history. Member countries are expected to discuss the proposal on Wednesday.
The proposed release is reported to have the potential to exceed the record 182 million barrels of oil released in 2022 during the outbreak of the Russia-Ukraine war.
The move is aimed at easing growing global supply disruptions due to the situation in the Strait of Hormuz. Iran is reportedly close to completely closing the vital shipping lane.
The Strait of Hormuz is one of the world's most critical energy routes, handling about 20% of global oil supplies.
The release of oil reserves by the IEA has the potential to help stabilize the market in the short term. However, a prolonged closure in the Strait of Hormuz is expected to have a major impact on oil and gas supplies, especially to Asian markets.
Reports also indicate that Iran has attacked several ships passing through the route this week, in addition to being believed to have laid mines in the waters.
Tehran has signaled that the route through the Strait of Hormuz will only be reopened if the US and Israeli attacks on Iran are stopped.
At the same time, reports earlier this week showed that the G7 countries are also considering releasing oil reserves to reduce global supply shortages.
The United States is also reported to be temporarily easing some restrictions on the sale of Russian oil to increase crude oil supplies on the world market.
