Oil prices rebounded on Wednesday as markets doubted whether the International Energy Agency's plan for a record release of oil reserves could offset potential supply shocks from the U.S.-Israeli conflict with Iran, Reuters reported.
Brent futures traded up $3.31, or 3.8%, at $91.11 a barrel by 1159 GMT. U.S. West Texas Intermediate (WTI) traded $3.13 higher, also 3.8%, at $86.58 a barrel.
Both contracts extended losses in early Asian trade, after plunging more than 11% on Tuesday, despite U.S. crude prices leaping 5% at the market's opening.
The IEA is expected to recommend the release of 400 million barrels of oil, the largest such move in the agency's history, to try to rein in energy prices amid the U.S.-Israeli war with Iran.
Such a volume would be more than double the 182 million barrels released in 2022 following Russia's invasion of Ukraine.
A source said the release would be spaced over at least two months, while Spain's energy minister said countries would have up to 90 days to release that volume.
In a note to clients, Goldman Sachs analysts said that a stockpile release of even 182 million barrels would offset 12 days of the investment bank's estimated 15.4 million-barrel-per-day Gulf exports disruption.
"[It] doesn't look like the oil market thinks that 'largest ever' release of strategic reserves will help much against current crisis," SEB analyst Bjarne Schieldrop said.
The U.S. and Israel pounded Iran on Tuesday with what the Pentagon and Iranians on the ground called the most intense airstrikes of the war.
The U.S. military also "eliminated" 16 Iranian mine-laying vessels near the Strait of Hormuz on Tuesday, the U.S. Central Command said, as U.S. President Donald Trump warned any mines laid in the Strait by Iran must be removed immediately.
Trump has repeatedly said the U.S. is prepared to escort tankers through the Strait of Hormuz when necessary. However, sources told Reuters the U.S. Navy has refused requests from the shipping industry for military escorts as the risk of attacks is too high for now.
G7 officials have also gathered online to discuss a potential release of emergency oil stockpiles to soften the market blow.
French President Emmanuel Macron will host a video call with other G7 leaders on Wednesday to discuss the impact of the conflict in the Middle East on energy and measures to address the situation.
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