Commerzbank strategists note that Oil and Brent prices extended gains even after the IEA agreed a record emergency release, as markets focus on hostilities around the Strait of Hormuz and potential US policy shifts to boost production. They highlight that traders see the reserve release as a temporary reprieve and remain concerned about supply-side shocks and stagflation risks.

IEA release fails to cap crude

"Crude oil prices rose after three commercial vessels were reportedly struck by projectiles near the Strait of Hormuz."

"Oil prices rose despite the International Energy Agency (IEA) members agreeing to release a record 400 million barrels of emergency oil reserves. This was more than double the 182 million barrels released after the Russian invasion of Ukraine in 2022. Investors interpreted the move as a temporary reprieve rather than a structural solution to the Strait of Hormuz blockade."

"The energy market remained the focal point. President Trump said IEA’s emergency oil release would ease energy price pressures while the US seeks to “finish the job” in its campaign against Iran. However, this failed to calm nervousness in the oil market."

"There were reports that President Trump is preparing to invoke Cold War-era Defense Production Act to clear the way for oil production off the coast of Southern California. US Interior Secretary Doug Burgum said the law is “absolutely” under deliberation to help a Houston-based company drill oil and override state-level permit issues."

"The macro outlook is increasingly shifting toward a stagflationary scenario, where resilient economic data is overshadowed by supply-side shocks."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)