International oil prices have dropped significantly The problem of supply shortage has been solved?

Affected by the geopolitical situation, international oil prices have finally ushered in a decline
after a long period of high operation.
The decline accelerated on Monday, with Brent oil falling below the $100 a barrel mark
for the first time since March 15.

As the conflict continues, European countries are accelerating their reliance on the energy of major powers, with a significant impact
on the global energy supply market.
In order to alleviate supply-side concerns, many countries released strategic petroleum reserves, which directly led to the cooling
of oil prices.

The United States announced that it will release 1 million barrels of strategic oil reserves per day over the next six months, releasing a total of 180 million barrels of oil
.

The International Energy Agency (IEA) said its member states had agreed to release 120 million barrels of oil reserves, half
of which the United States contributed.

Does the large-scale release of strategic oil reserves put pressure on the price of crude oil that has been rising continuously, does this indicate that the problem of energy supply shortage has been solved and oil prices will return to rationality?

A number of experts believe that the release of storage will indeed help oil prices fall in the short term, but it may be difficult to sustain
relying on this measure alone to stabilize oil prices.

Song Tao, an analyst at Shenwan Hongyuan Research Institute, pointed out that the joint release commitment of the IEA and the United States is expected to contribute a total of 240 million barrels of oil reserves from May to October this year, equivalent to 1.
33 million barrels per day
.
According to the data, the first week of April crude oil production of large countries was 10.
52 million barrels per day, down 4.
5%
from the average production in March.

Song Tao said that in the short term, the smooth release of 1.
33 million barrels / day of oil reserves by the United States and the IEA in the next six months can alleviate the gap in crude oil supply to a certain extent; However, if the OPEC+ does not adjust the production baseline in May, and the progress of the Iranian nuclear negotiations is lower than expected, the gap between crude oil supply and demand will continue to widen
with the economic recovery.

A report by Goldman Sachs shows that the release of reserves will help markets rebalance this year, but will not address the "structural deficit"
of oil.
The release of reserves will mitigate the demand disruption that prices will inevitably cause, but it will not be a source of continued supply for years to come
.

In addition, when the large-scale release of oil reserves triggers an excessively rapid decline in international oil prices, the willingness of major oil producers in the world to increase production will undoubtedly be hit, which will not help to truly solve the supply problem
of the crude oil market.

It is worth noting that although oil prices have cooled significantly in recent days, too low strategic oil reserves have also caused many concerns
.

According to IEA data, U.
S.
crude oil reserves currently hold only 568.
3 million barrels of crude oil, the lowest level
since May 2002.
If 180 million barrels of crude oil were released, the U.
S.
strategic oil reserves would fall to their lowest level
since 1984.

"The oil market has been undersupplied since the third quarter of 2020 and inventories have fallen to extremely low levels
.
Today, global oil markets are no longer able to deal with major supply disruptions, whether because of sanctions or other unexpected disruptions
.
said Peter McNally, Global Head of Industrial Materials and Energy at Collin.

Peter McNally said that over the past two years, we have seen the OECD's crude oil and fuel inventories fall from all-time highs to staggering lows
.
The peak of seasonal demand in the summer is approaching, and oil prices are expected to continue to fluctuate given the current low level of crude oil inventories
throughout the European supply chain.