Oil prices extended their gains in Asian trading on Thursday, defying the International Energy Agency’s (IEA) historic decision to release 400 million barrels from strategic reserves. Markets remain hyper-focused on the escalating conflict in the Middle East, which continues to threaten global supply chains and energy security.
Brent crude rose by 7.2 per cent to $98.60 per barrel, while West Texas Intermediate climbed 6.5 per cent to $92.96 per barrel. Meanwhile, stock markets showed signs of strain, with Japan’s Nikkei falling by just over one percent and the Kospi in South Korea remaining flat as investors braced for further volatility.
Strategic reserves and supply constraints
The IEA’s announcement, intended to calm the market, saw its 32 member countries agree to unlock a massive 400 million barrels—the largest emergency release in the organisation’s history. The United States Department of Energy confirmed on Wednesday that it would begin releasing 172 million barrels from its strategic reserves starting next week, a process it expects to take 120 days. Japan and Germany have also pledged to release their own stockpiles, though specific timelines for these contributions remain fluid.
Despite these measures, analysts remain sceptical about the immediate impact. The conflict, which ignited on 28 February following joint US-Israeli strikes on Iran, has significantly disrupted shipping. The Strait of Hormuz—the world’s most vital maritime chokepoint, through which roughly 20 per cent of global oil typically passes—has been effectively shut down by regional skirmishes and the threat of Iranian retaliation.
A deepening crisis
The ongoing war has rapidly expanded across multiple fronts, including Iraq, Bahrain, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, and the UAE. Iran has responded to the initial strikes with a campaign of missile and drone attacks, explicitly targeting regional energy infrastructure and shipping lanes.
This sustained confrontation has left the international community grappling with not only a massive spike in oil prices but also the broader implications of a protracted conflict. With Iran vowing to continue its campaign in what it describes as a “war of attrition", global energy markets remain in a state of high alert, balancing the potential relief from strategic reserves against the stark reality of ongoing maritime blockades and infrastructure damage in the Gulf.
