Yesterday, international oil prices plunged sharply, with the main WTI crude oil contract falling by more than 16% and Brent crude oil falling by more than 17%. The United Arab Emirates and Iraq have successively expressed their stance on increasing production. The United Arab Emirates said it would call on OPEC members to increase production. Iraq stated that Iraq can increase production if OPEC+ requires it.
International Energy Agency (IEA) Director Fatih Birol said on the 9th that if necessary, IEA members can release more crude oil reserves to reduce upward pressure on oil prices.
An energy conference was held that day in Paris, France, where the International Energy Agency is headquartered. Birol said at the meeting that the International Energy Agency’s previous announcement to release 60 million barrels of crude oil reserves was an “initial response” to the current situation. “This is only 4% of our inventories. We can provide more crude oil to the market if necessary and if member governments decide to do so.”
Birol also said that the International Energy Agency will release a “ten-point action plan” next week on how to quickly reduce oil consumption, focusing on the transportation sector. “In the crude oil market, the most difficult months are in the summer, the so-called ‘driving season’ in June and July, when demand increases.”
The International Energy Agency has 31 member countries, excluding Russia. On the 1st of this month, members of the International Energy Agency decided to jointly release 60 million barrels of crude oil reserves, including the 30 million barrels of crude oil reserves promised by the United States. The scale fell short of market expectations.
U.S. Energy Secretary Granholm said in Houston on Wednesday that any oil and gas company that can increase supply should quickly increase production as the energy crisis worsens after Russia’s military action in Ukraine.
EIA data showed that U.S. crude oil inventories fell by 1.863 million barrels in the week to March 4 to 411.56 million barrels, while market estimates were for a decrease of 657,000 barrels. Last week, the U.S. Strategic Petroleum Reserve fell to 577.5 million barrels, the lowest level since July 2002.
“The market is trading on two counter-expectations: On the one hand, the conflict between Russia and Ukraine may ease, in which Zelensky released his sincerity in negotiations, saying that Russia and Ukraine need to sit down and conduct substantive negotiations to end the conflict. The other is that market sentiment has reversed In the context of the phased lifting of risk events, fear of high prices has emerged in the market,” said Zhong Meiyan, energy director of Everbright Futures.
Zhong Meiyan believes that in the current market environment, the emotions of fear and greed are infinitely amplified in transactions, so prices are characterized by high volatility. From the perspective of the follow-up energy market, we still need to pay attention to the implementation of U.S. and British energy sanctions on Russia and the resulting supply shortage. This issue is still fermenting. In addition, the United States hopes that Saudi Arabia will lead OPEC to increase production and increase imports of Venezuelan crude oil. This is far from enough to make up for the lack of Russian energy supply. The current oil price is still likely to fluctuate, and investors still need to put risk control first.
</p
