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Highlights
- Crude oil prices tumbled on Wednesday.
- Members of the International Energy Agency (IEA) decide to release 120 million barrels from strategic reserves to try to quell price gains.
- The US along with its allies prepared more sanctions on Russia over civilian killing in North Ukraine.
Crude oil prices tumbled sharply on Wednesday after the world's large consuming nations pledged to release oil from their reserves to counter the tight supplies and hawkish minutes from the US central banks. Though the prices rose in the earlier trading sessions on prospects of new Russian sanctions, raising supply shortage concerns.
Members of the International Energy Agency (IEA) decide to release 120 million barrels from strategic reserves to try to quell price gains. The overall release will include 60 million barrels from the US alone as a part of the country's previous announcement to release 180 million barrels.
Crude oil prices have been volatile lately as the potential for more sanctions on the Russian energy sector from European countries following higher deaths in Ukraine has ignited supply concerns among investors.
Also Read: Crude oil surges to 14-year highs on delays in Iranian talks
The US along with its allies prepared more sanctions on Russia over civilian killing in North Ukraine, where a mass grave and tied bodies of people shot at close range were found in a town seized back from the Russian military.
In a retaliative move against Moscow, European Union along with the US drew pledges of further sanctions against Russia, including energy imports that Europe still gets from Russia.
Under the proposed sanctions, 27 member states must approve a ban on Russian coal import and prevent Russian ships from entering EU ports. At the same time, Britain also urged G7 and NATO countries to agree on a timetable to phase out O&G imports from Russia.
Source: © Lancemichaels | Megapixl.com
On Thursday, the prices of both oil benchmarks recovered slightly. June delivery Brent Crude oil futures inched up and last traded at US$102.64 per barrel up 1.55%, while May delivery WTI crude oil futures exchanged hands at US$97.66 per barrel, up 1.49% at 12:11 PM AEDT.
Huge release from IEA
The current release is the second significant reserve release by IEA members in the current year which is going to effectively boosts worldwide supply by roughly 2 million barrels a day for at least the next two months. The group collectively has about 1.5 billion barrels in strategic reserves.
Must Watch: As Russia-Ukraine War Intensifies, Commodities Also Soars
Meanwhile, the US Federal Reserve minutes detailed that the U.S. central bank was planning to raise rates by 50 basis points at its most recent meeting, suggesting a hawkish approach to curb inflation which boosted the U.S. dollar. A higher US dollar makes crude oil more expensive for other currency holders.
Also Read: Crude oil slides from multi-year highs as Iran talks rev up
Bottom Line
Crude oil prices tumbled significantly on Wednesday as IEA members pledged to release 120 million barrels from strategic reserves to try to quell price gains.
Here’s how commodities performed in the last week click here
