Oil pares gains after spiking nearly 30% as G-7 nations consider tapping emergency reserves
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Fire erupting at an oil depot in Iranian capital Tehran.
PHOTO: AFP
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SINGAPORE – Oil pulled back towards US$100 a barrel, paring a nearly 30 per cent spike earlier on March 9, as a report about talks on a coordinated release of reserves took some heat out of the market racked by the escalating war in the Middle East.
Global oil benchmark Brent crude was still trading 17 per cent higher around US$108 a barrel, but much lower than the early session peak of US$119.50.
US benchmark West Texas Intermediate (WTI) also eased after jumping 31 per cent. Brent climbed 27 per cent and WTI surged 35.6 per cent last week, before the latest jumps.
The Financial Times reported that Group of Seven finance ministers will discuss a possible joint release of oil from reserves coordinated with the International Energy Agency on March 9, citing people familiar with the situation.
Iraq and Kuwait have begun cutting oil output, adding to earlier liquefied natural gas reductions from Qatar, as the war blocked shipments from the Middle East.
Analysts predict the United Arab Emirates and Saudi Arabia will have to also cut output soon as they run out of oil storage.
The war could leave consumers and businesses worldwide facing weeks or months of higher fuel prices even if the week-old conflict ends quickly, as suppliers grapple with damaged facilities, disrupted logistics and elevated risks to shipping.
US President Donald Trump dismissed the war-related spike in oil prices as a “small price to pay” for removing the threat of Iran’s nuclear programme.
“Short-term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for U.S.A., and World, Safety and Peace. ONLY FOOLS WOULD THINK DIFFERENTLY!” he wrote on March 8 on his Truth Social platform.
US Senate Democratic Leader Chuck Schumer called on Mr Trump to release oil from the nation’s Strategic Petroleum Reserve (SPR).
“President Trump should release oil from the SPR now to stabilise markets, bring prices down, and stop the price shock that American families are already feeling thanks to his reckless war,” Mr Schumer said in a statement.
The war in the Middle East is showing no signs of abating after US and Israeli strikes on Iran
More than a dozen countries have been sucked into the fray and the conflict has stoked fears of an inflation crisis. US retail gasoline prices have jumped to the highest level since August 2024, posing a significant challenge to Mr Trump and his party at the US midterm elections later in 2026.
Still, Mr Trump is pushing ahead with the war, and in a social media post early on March 7, said the United States will consider striking areas and groups of people in Iran that were not previously considered targets. The remarks came after Iranian President Masoud Pezeshkian vowed not to back down.
More major energy infrastructure was threatened over the weekend, with Saudi Arabia intercepting and destroying drones heading to the one million barrel a day Shaybah oil field. Last week, the kingdom was forced to halt operations at the Ras Tanura refinery, the country’s biggest, and is seeking to divert barrels to its Red Sea ports for export after the Hormuz closure.
Rising energy prices, including for products such as gasoil, are rippling through the market. Import-dependent Asia, which leans heavily on the Middle East, is feeling the most immediate pain.
In Japan – which takes more than 90 per cent of its crude from the region – refiners are asking for the option of drawing on national oil reserves. China’s government has told the country’s top refiners to suspend exports of diesel and gasoline, and South Korea is reviewing whether to introduce an oil price cap for the first time in 30 years.
For analysts at ING Groep, the base case is now four weeks of disruption – two of full upheaval and two weeks of 50 per cent, said Mr Warren Patterson, the bank’s head of commodities strategy in Singapore.
“This scenario doesn’t necessarily mean that we see a full end to the conflict in this time period,” he said. “But if US and Israeli strikes degrade Iran’s ability to attack vessels and enforce a closure of the Strait of Hormuz, we could see flows starting to normalise.”
The bank’s most dramatic scenario is a three-month, full disruption to oil and liquefied natural gas flows. This would likely see oil prices spiking to records through the second quarter, the bank’s analysts wrote in a note. BLOOMBERG, REUTERS
