The International Energy Agency announced the release of crude oil reserves, why it failed to cool international oil prices

Recently, affected by the Russian-Ukrainian conflict and the severe sanctions imposed by the West on Russia, international oil prices rose above
$100 per barrel.
In order to cool oil prices, the International Energy Agency convened an interim ministerial meeting on March 1 and decided to jointly release 60 million barrels of crude oil reserves
.

Although the market has expected the above news, international oil prices still rose
sharply in early trading that day.
After the International Energy Agency announced the release of crude oil reserves, gains narrowed only slightly
.
In subsequent trading, international oil prices continued to soar
.

Light crude futures for April delivery rose $7.
69, or 8.
03%, to close at $103.
41 a barrel on the New York Mercantile Exchange by the close of the day, rising as high as $106.
78 a barrel during the session, while London Brent crude futures for May delivery rose $7, or 7.
15%, to close at $104.
97 a barrel, and rose as high as $
107.
57 a barrel during the session.

Market analysts believe that the International Energy Agency's decision to release crude oil reserves has failed to effectively cool oil prices because the scale of reserves released this time is less than market expectations, which is insufficient
compared with global crude oil consumption and potential supply shortfalls.
In addition, factors such as the extent of the actual reduction in Russian crude oil supply and the uncertain outlook for the Ukraine crisis have also increased the market's concerns
about the further deterioration of the energy supply situation.

The International Energy Agency announced on the 1st that its 31 member countries decided to release 60 million barrels of crude oil reserves at an interim ministerial meeting held on the same day, including 30 million barrels of crude oil reserves
promised by the United States.
The media previously reported that members of the International Energy Agency may release 70 million barrels of crude oil reserves, and the size of the United States releasing crude oil reserves is 40 million barrels
.

The IEA said that the agency's members have a total of 1.
5 billion barrels of emergency crude oil reserves, and the decision to release about 4% of the total can be released at a scale of 2 million barrels per day for 30 days
.
This is the fourth joint release of crude oil reserves
since the establishment of the International Energy Agency in 1974.

It is estimated that the scale of crude oil reserves released by members of the International Energy Agency this time is equivalent to Russia's crude oil production in 6 days or crude oil exports in 12 days
.

U.
S.
Secretary of Energy Jennifer Granholm issued an announcement on the same day that the International Energy Agency's decision is committed to dealing with serious market and supply shocks
related to the conflict in Ukraine.
The United States will release 30 million barrels of strategic crude oil reserves
.
If needed, the United States is prepared to take additional measures
as appropriate.

Matt Smith, chief oil analyst for the Americas at Keppler, a market research firm, said that given factors such as delays from the announcement to the actual flow of crude oil into the market, the biggest impact expected by the IEA to release crude oil reserves is the impact
on market psychology.

Bob Yoje, head of energy futures at Mizuho Securities USA, said that 60 million barrels of crude oil will do little to change the situation and will not be enough to offset the loss
of Russian crude supply.
"In short, 60 million barrels is not enough
.
"

Rebecca Babin, senior energy trader at Canadian Imperial Bank of Commerce, said the release of crude reserves could provide a modest cushion in the short term, but it was insufficient
compared to the scale of the disruption in Russian crude supply.

In addition, some analysts pointed out that in addition to the supply shortfall, factors such as declining purchase intentions, payment bottlenecks, and financing difficulties may also hinder transactions and exacerbate oil prices
.

Commerzbank commodities analyst Carsten Fritsch said commodity consumers are increasingly reluctant to buy oil, liquefied natural gas, coal, metals and grain
from Russia due to uncertainty.
Fritsch said several Russian banks were excluded from the Society for Worldwide Interbank Financial Communications (SWIFT) system, making it more difficult
to deliver payments.
In addition, some Western banks have refused to finance
these transactions.

Michael Lynch, president of the U.
S.
Energy Economic Strategy Research Consultancy, said that in the event of an escalation of the conflict, the market reaction shows that the market expects a significant reduction
in Russian crude oil supply.
Traders believe that the release of crude oil reserves is a prelude
to greater sanctions imposed by the West and further reduction in crude oil supply.

In addition, Canadian Prime Minister Trudeau recently announced a ban on oil imports from Russia, becoming the first Western country to impose an oil embargo on Russia due to the conflict in Ukraine, which sent a signal that unnerved
the market.

The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers are scheduled to hold a ministerial meeting on the 2nd to discuss crude oil production quotas
in April.
The market expects OPEC and non-OPEC producers to maintain their production increase plans
for several months.