Oil Prices Surge Again, Returning Above $100: Record Strategic Reserves Release Fails to Help, Panic Sentiment Dominates Market

The International Energy Agency’s unprecedented coordinated release of reserves failed to calm the market as expected, instead fueling panic. On March 12, international oil prices surged again, with the main US WTI crude futures jumping 9.72% for the day to close at $95.73 per barrel; global benchmark Brent crude futures rose 9.22%, closing at $100.46 per barrel. This was the first time since August 2022 that Brent closed above the $100 psychological threshold. On March 13, during Asian trading hours, the rally continued.

On March 12, the IEA released a report stating that due to escalating tensions in the Middle East, shipping through the Strait of Hormuz was nearly halted, leading to the largest-ever disruption in global oil supply. The day before, the IEA announced that 32 member countries had unanimously agreed to release 400 million barrels from strategic reserves to mitigate the impact of the Middle East tensions on oil supply and prices. The agency emphasized in the report that while emergency reserves provided some buffer, long-term market stability still depended on the duration of the conflict and the speed of shipping route recovery.

Such a large-scale release of reserves failed to ease market anxiety and instead ignited another jump in oil prices.

Why did a multilateral effort to stabilize oil prices turn into “adding fuel to the fire”? “The core issue has long gone beyond simple arithmetic of excess or shortage of oil, and now involves a systemic crisis in global oil liquidity,” said Zhong Jian, senior researcher at 52HZ Shipping Research Institute. He explained that what the market truly desires is a stable, predictable daily flow of crude oil, not a one-time injection of stockpiles. “Stockpile injections cannot resolve the blockage of the main route, the Strait of Hormuz.”

Zhong Jian believes that current fluctuations in international oil prices can be broken down into three dimensions: between $80 and $90, mainly reflecting “war risk premiums,” which stem from geopolitical uncertainties and tend to quickly recede as tensions ease; between $90 and $110, indicating the market has entered a “supply disruption pricing” phase, where traders begin pricing in actual supply interruptions, and if shipping through the Strait of Hormuz remains blocked, this price level will be further solidified; above $110 to $120, representing “oil financial valuation pricing,” which occurs only if there is a revolutionary change in Middle Eastern geopolitics that triggers a fundamental reassessment of oil assets globally. “As long as the navigation through the Strait of Hormuz remains essentially blocked, oil prices are very likely to establish a stable platform between $90 and $110.”

As US consumers face sharply rising gasoline prices and inflation pressures, President Trump boasted on social media that high energy prices are a “benefit” for the US. He stated, “The US is the world’s largest oil producer, so when oil prices go up, we make a lot of money.”

Market reports indicate that the US Treasury is considering measures to lower oil prices, including intervention in futures markets. The Financial Times reported that Teri Duffy, CEO of the Chicago Mercantile Exchange (CME), which manages US oil futures trading, warned that if the Trump administration attempts to curb rising crude prices through market intervention, it could trigger an “epic disaster.” “Markets do not like government interference in price setting,” he said. “If the government takes such actions, investors may lose confidence in the market’s ability to set prices for key commodities.”

According to Xinhua News Agency, Iran’s new Supreme Leader, Mujtaba Khamenei, issued his first statement after taking office on the 12th, saying Iran will not abandon revenge and will continue to use the blockade of the Strait of Hormuz as a means, calling on regional neighbors to close US military bases as soon as possible. Iran’s Deputy Foreign Minister Ravanchi told media that Iran allows ships from some countries to pass through the Strait of Hormuz, but countries involved in aggression against Iran do not have “safe passage rights” through the strait. He also stated that Iran has not laid mines in the waters of the Strait of Hormuz.

On the 12th, WTI crude futures briefly surged over 10%, reaching $98 per barrel. However, after Iran’s limited openness to navigation, prices sharply retreated. On March 13, during Asian morning trading, WTI rose slightly to $97.08 per barrel.

U.S. Energy Secretary Chris Wray told US media that the US is “not yet ready” to escort oil tankers through the Strait of Hormuz.

(Article source: The Paper)