Oil Falls After Historic Proposal to Withdraw from Global Reserves

Global oil markets saw a noticeable decline on Wednesday after the Wall Street Journal reported that the International Energy Agency proposed the largest withdrawal from strategic oil reserves in its history, in a move aimed at curbing rising prices that have surged due to tensions in the Middle East.

As of 00:23 GMT, Brent crude futures fell by 23 cents, or 0.26%, to $87.57 a barrel, while West Texas Intermediate crude dropped 37 cents or 0.44% to $83.08 a barrel.

The recent spikes in oil prices came after the outbreak of conflict between the United States and Israel on one side, and Iran on the other, amid an explicit threat from the Iranian Revolutionary Guard not to allow any oil shipments from the Middle East if U.S. and Israeli attacks continue.

This move prompted President Donald Trump to warn that the U.S. could respond more forcefully if oil exports from this vital region were blocked.

Global crude oil prices had briefly touched levels not seen since mid-2022, reaching $119 a barrel during Monday's session, leading to a significant increase in gasoline and fuel costs since the start of U.S. and Israeli strikes on February 28.

Despite the White House's efforts to secure the passage of tankers through the Strait of Hormuz with naval escorts, this plan has not yet succeeded in boosting shipping traffic through the vital waterway, increasing risks to global oil supplies.

According to Wood Mackenzie estimates, the ongoing conflict could lead to a reduction in oil supplies from the Gulf by about 15 million barrels per day, which could push prices back up to record levels of $150 a barrel.

At the same time, Iraq is looking for alternative ways to export its oil amid disruptions to navigation through the strait.