Oil ticks higher to $85 as traders await possible historic reserve release

Oil prices rose Wednesday as the market awaits a historic release of emergency reserves from the International Energy Agency.

Japan’s Prime Minister Takaichi Sanae told reporters Wednesday that Tokyo plans to independenly release stockpiled oil as early as Monday, according to Japanese broadcaster NHK.

Shortly before 7 a.m. ET, global benchmark Brent crude futures were 2% higher to $89.49 a barrel, after earlier rising above the $92 mark. U.S. crude oil gained 2.4% to trade at $85.44 a barrel, also paring earlier gains.

On Tuesday, G7 energy ministers convened in Paris to discuss the U.S.-Iran war and its impact on global oil and gas markets. The conflict has disrupted energy production in the Middle East and led to a blockade in the Strait of Hormuz, a critical shipping route.

On Wednesday morning, Reuters reported that the IEA would recommend the release of strategic oil stocks that would exceed 100 million barrels per day in the first month. In a statement sent to Bloomberg, G7 energy ministers said they backed the “implementation of proactive measures to address the situation, including the use of strategic reserves.”

It came after The Wall Street Journal reported Tuesday evening that the IEA had proposed the largest ever release of oil from its strategic reserves, exceeding the 182 million barrels that its member states put on the market following Russia’s full-scale invasion of Ukraine in 2022. Countries are set to decide on Wednesday whether to release emergency oil stocks.

The IEA did not immediately respond to a request for comment from CNBC.

In a Tuesday statement, IEA Executive Director Fatih Birol said member countries currently hold over 1.2 billion barrels of public emergency oil stocks, with a further 600 million barrels of industry stocks held under government obligation.

“In oil markets, conditions have deteriorated in recent days,” Birol said, pointing to transit challenges as well as a substantial curtailing of oil production.

“This is creating significant and growing risks for the market,” he added. “We discussed all the available options, including making IEA emergency oil stocks available to the market.”

On Tuesday, oil prices fell drastically after a post on U.S. Secretary of Energy Chris Wright’s social media account wrongly stated that the U.S. Navy had escorted a tanker through the Strait of Hormuz.

White House Press Secretary Karoline Leavitt later told reporters the U.S. Navy had “not escorted a tanker or a vessel at this time.”

Overnight, it was reported that American forces had sunk several Iranian ships, including 16 minelayers, near the Strait of Hormuz.

Wednesday morning also saw other…