Will The Release of Emergency Oil Reserves Ease Fuel Prices?

Please note that due to market volatility, some of the key levels may have already been reached and scenarios played out.

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After the previous day’s losses, oil prices rose again on Friday, caught between the release of strategic reserves from consumer countries, the drop in Russian supply, and the erosion of demand from China.

On Thursday, the International Energy Agency (IEA) confirmed member countries' contributions to the second collective action to release oil stocks in response to Russia's invasion of Ukraine. Commitments submitted by members reached 120 million barrels to be released over a six-month period, the IEA added. The United States will release 60 million barrels of stored oil and Japan – 15 million barrels. The other major contributors are South Korea, Germany, France, Italy, and the United Kingdom. Despite these unprecedented volumes, doubts remain as to whether this influx of supply will make up for the Russian crude shortage.

Moreover, the extension of the lockdown in Shanghai by the authorities undoubtedly contributed to the fall in prices. This means that the economic hub of 25 million people, which accounts for around 4% of China's oil demand, is doomed to stall.

(Source: IEA.org)