Oil prices rebounded on Wednesday as markets questioned whether the International Energy Agency's (IEA) reported plan for a record release of oil reserves would be enough to counter potential supply shocks from the U.S.-Israeli conflict with Iran.
Brent futures traded up $3.52, or 4%, at $91.32 a barrel by 0922 GMT. U.S. West Texas Intermediate (WTI) traded $3.69 higher, or 4.4%, at $87.14 a barrel.
Both contracts extended losses in early Asian trade, after plunging more than 11% on Tuesday, despite U.S. crude prices leaping 5% at the market's opening.
The IEA is to recommend the release of 400 million barrels of oil, the largest such move in its history, to try to restrain soaring crude prices, reports said on Wednesday.
That would exceed the 182 million barrels of oil that IEA member countries put onto the market in two releases in 2022 when Russia launched its full-scale invasion of Ukraine.
"[It] doesn't look like the oil market thinks that "largest ever" release of strategic reserves will help much against current crisis," SEB analyst Bjarne Schieldrop said.
The U.S. and Israel pounded Iran on Tuesday with what the Pentagon and Iranians on the ground called the most intense airstrikes of the war.
The U.S. military also "eliminated" 16 Iranian mine-laying vessels near the Strait of Hormuz on Tuesday, the U.S. Central Command said, as U.S. President Donald Trump warned any mines laid in the Strait by Iran must be removed immediately.
Trump has repeatedly said the U.S. is prepared to escort tankers through the Strait of Hormuz when necessary. However, sources told Reuters the U.S. Navy has refused requests from the shipping industry for military escorts as the risk of attacks is too high for now.
G-7 officials have also gathered online to discuss a potential release of emergency oil stockpiles to soften the market blow.
French President Emmanuel Macron will host a video call with other G-7 leaders on Wednesday to discuss the impact of the conflict in the Middle East on energy and measures to address the situation.
Abu Dhabi state oil giant ADNOC has shut its Ruwais refinery in response to a fire at a facility within the complex following a drone strike, according to a source, marking the latest energy infrastructure disruption due to the U.S.-Israeli war on Iran.
Saudi Arabia, the world's largest oil exporter, is seen boosting supplies via the Red Sea, although they are still far below the levels needed to compensate for the drop in flows from the Strait of Hormuz, shipping data showed.
The kingdom is relying on the Red Sea port of Yanbu to help it boost exports to avert steep production cuts as its neighbours Iraq, Kuwait and the United Arab Emirates have already reduced output.
Energy consultancy Wood Mackenzie said the war is currently cutting Gulf oil and oil products supply to the market by some 15 million barrels per day, which could raise crude prices to $150 per barrel.
"Even a quick resolution probably implies weeks of disruption for energy markets yet," Morgan Stanley said in a note.
Reflecting higher demand, U.S. crude, gasoline and distillate stocks fell last week, market sources said, citing American Petroleum Institute figures on Tuesday.
