Brent crude oil prices rose to $91.32 per barrel amid concerns about supply disruptions in the Middle East.
World oil prices rebounded sharply on March 11th as the market worried that the Middle East conflict would shock supply, despite the IEA's proposal to release record reserves.
World crude oil prices recorded a significant increase on March 11th amid market concerns about potential supply shocks from the conflict in the Middle East. At the close of trading, Brent crude rose $3.52 (4%) to $91.32 per barrel. At the same time, US WTI crude rose $3.69 (4.4%) to $87.14 per barrel.
Proposal to release record stockpiles from IEA
The International Energy Agency (IEA) is proposing a plan to release oil from its largest ever reserves to cool down the market. According to the Wall Street Journal, the amount of oil expected to be released onto the market will exceed 182 million barrels – a record figure previously released by IEA member countries in 2022 when the Russia-Ukraine conflict began.
The IEA convened an emergency meeting on March 10 and is expected to make a final decision on March 11. The plan requires absolute consensus from member states; opposition from even one country could delay implementation. However, analysts from Goldman Sachs believe that this release will only be enough to offset approximately 12 days of export disruptions from the Gulf region, estimated at around 15.4 million barrels per day.
Impact of conflict and response from manufacturers
Despite IEA intervention efforts, the market remains skeptical about their practical effectiveness. Bjarne Schieldrop, an expert from the SEB, argues that releasing strategic reserves may not be very helpful in the current crisis. Meanwhile, consulting firm Wood Mackenzie warns that conflict could push crude oil prices to $150 per barrel if supply cuts from the Gulf continue.
To mitigate risks, Saudi Arabia – the world's largest oil exporter – is increasing shipments through its Yanbu port on the Red Sea coast. This move aims to avoid reliance on the Strait of Hormuz amid production cuts by neighboring countries such as Iraq, Kuwait, and the United Arab Emirates (UAE). However, shipping data suggests that this alternative supply is still insufficient to fully offset the decline in the global market.
World energy prices as of March 11th
| Item | Unit | Price | Fluctuations |
|---|---|---|---|
| Brent crude oil | USD/barrel | 91.32 | +4.0% |
| WTI oil | USD/barrel | 87.14 | +4.4% |
| Natural gas (LNG) | USD/mmBtu | 3.02 | -3.2% |
The natural gas market experienced a slight decline.
In contrast to the rise in oil prices, liquefied natural gas (LNG) prices in the US fell by approximately 3.2% to $3.02/mmBtu on March 10th. This decline was primarily due to forecasts of warmer weather in the US over the next two weeks, reducing heating demand.
Although the shutdown of LNG production in Qatar due to the conflict involving Iran has reduced global supply by approximately 20%, US inventories remain stable. According to data from LSEG, average natural gas production across the 48 contiguous US states in March reached 109.9 billion cubic feet per day (bcfd), a slight increase from 109.2 bcfd in February.
Analysts said mild weather allowed energy companies to maintain stable inventory levels, only about 2% below the historical average. However, gas flows to major U.S. LNG export plants fell to 18.1 bcfd in March, reflecting a slowdown from the record 18.7 bcfd the previous month.
