Massive dumping can't stop the surge in oil prices? Research firm: The U.S. may have run out of options.

Cailian Press, March 12 (Editor: Liu Rui) As Iran conflicts cause international oil prices to surge, the International Energy Agency (IEA) announced on Wednesday an emergency release of 400 million barrels of oil reserves to stabilize prices.

However, renowned research firm Wolfe Research believes that this move should only mitigate the shock to the oil market and cannot fully resolve the issue. The immediate reopening of the Strait of Hormuz remains the top priority.

Market Has Already Priced in the Storage Release News

On Wednesday, Eastern Time, after media reports of the IEA’s oil reserve release plan, international oil prices initially fell but then reversed and continued to rise. Ultimately, the May-dated Brent crude futures increased by 5.2% to $92.25 per barrel, and WTI crude futures rose by 5.3% to $87.93 per barrel.

Tobin Marcus, an analyst at Wolfe Research, stated in a report: “The market’s reaction to this news was not very significant because we believe it was already priced in on Monday.”

“On Sunday night, crude oil prices approached $120 per barrel, but sharply declined on Monday, largely because reports indicated that the G7 was preparing for a large-scale strategic petroleum reserve release.”

Marcus added: “Before Trump hinted that the war was ‘completely over’ and suppressed oil prices, such speculation had already emerged, pulling the benchmark crude price back into the $90 to $100 range.”

Limited Impact of the Oil Reserve Release

Wolfe Research indicated that the speed and timing of the IEA member countries’ oil reserve release are crucial in assessing its impact on the oil market.

Before the Iran conflict erupted, nearly 20 million barrels of oil were transported daily through the Strait of Hormuz.

Marcus said: “Assuming the Strait of Hormuz is completely closed, the 400 million barrels released is roughly equivalent to about 20 days of transportation through that strait.”

Therefore, Wolfe Research warns that this move by the IEA cannot “eliminate the need to reopen the strait.”

Trump May Have No More Cards to Play

Wolfe Research also noted that although the scale of this strategic petroleum reserve release is significant and could alleviate some of the market shocks caused by the war, and easing sanctions on Russian oil might also somewhat reduce market pressure, it still cannot eliminate the long-term impact of the closure of the Strait of Hormuz.

“Moreover, other measures considered by the U.S. seem to have limited significance in our view, possibly because Trump cannot unilaterally implement these measures (such as temporarily waiving federal gasoline taxes), or because these measures are too trivial to matter (like exemptions under the Jones Act), or because they could be destructive and counterproductive (such as imposing export bans on crude oil and refined products).”

Therefore, after the IEA announced the release of oil reserves, Marcus believes the U.S. may no longer have more effective cards to play in response to soaring oil prices. Marcus bluntly stated:

“We believe there will be no more useful options after this.”

(Cailian Press, Liu Rui)