Oil prices decline as IEA considers largest-ever emergency reserve release

London: Oil prices fell on Thursday following reports that the International Energy Agency (IEA) is considering a record release of emergency oil reserves to address potential supply disruptions caused by the ongoing conflict in Ukraine.

According to details, the IEA may deploy its largest-ever drawdown from its emergency stockpiles in an effort to stabilize the market and offset risks stemming from the war. This move comes as global energy markets remain volatile due to concerns over supply shortages.

Brent crude futures dropped by $5.54, or 4.8%, settling at $109.98 a barrel. Similarly, US West Texas Intermediate (WTI) crude fell by $6.06, or 5.6%, closing at $102.74 per barrel. The decline in prices follows earlier gains driven by fears of tighter supplies after Western sanctions were imposed on Russia, one of the world’s largest oil exporters.

The IEA, which represents 31 mostly industrialized countries, is reportedly weighing the release of up to 60 million barrels from its reserves. This would be in addition to the 60 million barrels already agreed upon by member countries in early March. The potential release is aimed at cushioning the impact of reduced Russian oil exports and maintaining stability in the global oil market.

Market analysts noted that the possibility of a significant reserve release has contributed to easing price pressures. However, they also cautioned that the situation remains fluid, with ongoing geopolitical tensions and uncertainty over the duration and scale of supply disruptions.

The IEA has not yet made a formal announcement regarding the final volume or timing of the reserve release. The agency is expected to provide further details after consultations with member countries.

Oil markets are closely monitoring developments, as any large-scale release from emergency reserves could have a substantial impact on prices and supply dynamics in the coming weeks.