Oil prices soared again this Wednesday, after having started with more stable developments. News linked to the war in the Middle East, from the release of raw material reserves to new attacks on vessels in the Strait of Hormuz, are dictating performance.
The prices of North Sea Brent contracts, a reference for imports made by Portugal, are rising close to 5%, exceeding 92 dollars per barrel. WTI crude oil is appreciating more than 5%, with a barrel approaching US$88, at 12:45 pm.
These are increases that follow the intense slide experienced on Tuesday, following what is happening in the Middle East.
This Wednesday, it was news that the International Energy Agency (IEA) would propose the extraordinary release of strategic oil reserves on an unprecedented scale, even surpassing what happened in 2022, after Russia’s invasion of Ukraine. THE Wall Street Journal said the release of 400 million barrels would more than double the last release of reserves, which was confirmed earlier in the afternoon.
The G7 countries (a group made up of Germany, Canada, the United States of America, France, Italy, Japan and the United Kingdom) had already shown their support, and the unanimous agreement of the 32 AIE countries arrived in the form of a statement. “The oil market challenges we are facing are of an unprecedented scale, and so I am very pleased that the agency’s member countries have responded with collective emergency action of an unprecedented scale,” said Fatih Birol, the agency’s executive director. The calendar has not yet been defined.
Portugal releases 10% of reserves
According to the same statement, the agency’s members own 1.2 billion barrels, plus 600 million barrels held by the oil sector by government decision. This is the sixth time that there has been a coordinated action to release barrels (1991, 2005, 2011 and twice in 2022), says the agency. And Portugal will contribute.
“We are going to share with several partners on an international scale what was one of the conclusions of the G7 meeting. We are going to make available, in principle, 10% of our strategic reserves, so that there can be more supply, and greater containment of fuel prices. We are aligned”, as Luís Montenegro declared to journalists this Wednesday, according to the broadcast of RTP Notícias. The Prime Minister did not indicate the quantity of barrels, but the Business Journal estimates it to be two million.
Independently, Japan is also expected to release raw material reserves by next week, according to information transmitted by the country’s prime minister.
However, the possible increase in oil available on the market is not containing the rise in prices, given fears about supply. Maritime traffic in the Strait of Hormuz, with attacks on vessels being recorded, continues to raise fears for the market, given that a fifth of the global oil supply passes through there.
However, the agency Reuters reported that the spokesman for the Iranian military command, Ebrahim Zolfaqari, addressed the United States saying that they must be prepared for the price of a barrel of oil to more than double: “Prepare for oil at 200 dollars per barrel, because the price of oil depends on the regional security that you have destabilized”, he declared.
The spike in oil prices since the US and Israel attack on Iran is already making fuel prices more expensive in Portugal, with diesel at gas stations seeing the biggest increase ever (and very partially offset by a tax discount). The duration of the conflict is pointed out by experts as determining the evolution of prices (BNP Paribas, for example, calculates that the extension could take the value above US$130 per barrel), as well as possible actions by central banks to combat inflation. Inflation in the world’s largest economy remained at 2.4% in February, it was announced this Wednesday.
(updated at 2:35 pm with information that the release of reserves by the International Energy Agency was officially confirmed; updated at 3:25 pm with information about national contribution to this release)
