Oil prices climbed on Wednesday as markets awaited a potential record release of emergency crude reserves by the International Energy Agency, while escalating tensions around the Strait of Hormuz continued to threaten one of the world’s most critical energy shipping routes.
Global benchmark Brent crude rose about 2% to $89.49 a barrel in early trading, after briefly surging above $92 earlier in the session. U.S. benchmark West Texas Intermediate crude gained roughly 2.4% to $85.44 a barrel, paring back some of its earlier gains as traders assessed the potential scale of emergency oil supply injections.
The market’s focus has shifted to a coordinated response from the world’s largest industrialized economies following disruptions caused by the intensifying conflict between the United States and Iran.
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Energy ministers from the Group of Seven met in Paris on Tuesday to discuss the impact of the conflict on global oil and gas markets. The fighting has already disrupted regional energy production and led to a blockade and security threats along the Strait of Hormuz — a narrow passageway through which roughly a fifth of global oil supplies normally pass.
According to a report by Reuters, the IEA is preparing to recommend the release of more than 100 million barrels of oil from strategic reserves during the first month of the intervention. If implemented, the move would represent one of the largest emergency oil releases ever coordinated by the agency.
The proposal would surpass the 182 million barrels released by IEA member countries following the Russian invasion of Ukraine, which previously marked the largest coordinated release of strategic reserves.
In a statement shared with Bloomberg, G7 energy ministers said they supported “the implementation of proactive measures to address the situation, including the use of strategic reserves.”
IEA Executive Director Fatih Birol said member countries currently hold more than 1.2 billion barrels of government-controlled emergency oil reserves, with an additional 600 million barrels stored by industry under government obligations.
“In oil markets, conditions have deteriorated in recent days,” Birol said, pointing to transit challenges in key shipping lanes and a sharp curtailment of oil production in parts of the Middle East.
“This is creating significant and growing risks for the market,” he added. “We discussed all the available options, including making IEA emergency oil stocks available to the market.”
Separately, Sanae Takaichi, the prime minister of Japan, told reporters Wednesday that Tokyo plans to independently release oil from its own strategic reserves as early as Monday to help stabilize global supply.
The heightened focus on emergency stockpiles indicates growing anxiety that shipping through the Strait of Hormuz could remain disrupted for an extended period. Several commercial vessels have been attacked off Iran’s coast in recent days, raising fears among shipping companies and insurers. Tanker and cargo traffic through the strait has slowed significantly as security risks escalate.
Overnight reports indicated that American forces had sunk several Iranian vessels — including 16 ships believed to be minelayers — near the shipping corridor.
Further signs of escalation emerged on Wednesday when the United Kingdom Maritime Trade Operations said three cargo ships off Iran’s coast had been struck by projectiles. One of the vessels was reportedly hit while transiting the Strait of Hormuz.
Authorities in Dubai also reported that two drones fell near Dubai International Airport, injuring four people and forcing a temporary closure of the surrounding airspace.
Energy analysts say the future direction of oil prices will depend heavily on how long the conflict continues and whether safe passage through the Strait of Hormuz can be restored.
“The critical factor remains the war’s duration,” said Sasha Foss, an energy market analyst at Marex.
“These releases of the IEA’s stocks buy us a few days, but in reality it all depends on the opening of the Strait of Hormuz,” Foss said, warning that if the conflict drags on, oil prices could quickly climb above $100 a barrel.
Market volatility has already been heightened by misinformation surrounding developments in the region. On Tuesday, oil prices briefly plunged after a social media post from Chris Wright, the U.S. Secretary of Energy, mistakenly suggested that the U.S. Navy had escorted a tanker through the strait.
The statement was later corrected after Karoline Leavitt, the White House press secretary, told reporters that the Navy had “not escorted a tanker or a vessel at this time.”
Analysts say the situation highlights how sensitive energy markets have become to developments in the Middle East, particularly around the Strait of Hormuz. Even a temporary disruption in the passage can send shockwaves through global energy markets because the waterway handles massive volumes of crude exports from major producers, including Saudi Arabia, Iraq, Kuwait, and the United Arab Emirates.
Paul Gooden, head of global natural resources at Ninety One, said that while oil prices could ease if tensions cool, the market is unlikely to return to the lower price range seen earlier in the year.
“If tensions de-escalate in the coming weeks, oil prices could retreat,” Gooden said. “But even in that scenario, it is unlikely prices will return to the $60–$70 range seen earlier this year.”
He warned that a prolonged disruption would have much more serious consequences.
“If the disruption lasts longer, oil prices could spike further — potentially above $120 or even higher — until higher prices begin to curb demand.”
Traders are currently watching to see whether the IEA’s coordinated release of emergency reserves will be enough to calm markets — or merely buy time while the geopolitical crisis in the Gulf continues to unfold.