Oil Plunges, Hopes of Emergency Stockpiles Emerge
Oil prices fell on Tuesday (March 10) after the market began pricing in the possibility of policy intervention to curb the energy surge caused by the Iran war. Brent was last at US$92.58/barrel (-6.45%), while WTI fell to US$87.74/barrel (-7.03%), after the previous session recorded extreme volatility.
The decline was triggered by a series of signals that policymakers were ready to act before the supply shock worsened. IEA Executive Director Fatih Birol held an extraordinary meeting to assess market conditions, while the G7 countries asked the IEA to prepare a scenario for releasing emergency stocks, although no decision on releasing reserves has been taken at this time.
From Washington, President Donald Trump stated that he would consider easing oil-related sanctions and deploying the US Navy to escort tankers through the Strait of Hormuz, as well as keeping the option of talking with Iran open. However, he did not provide details on the mechanism, timeline, or how quickly shipping flows could recover—factors that have kept the market's view that the risk premium has not completely disappeared.
Despite today's sharp correction, oil prices are still supported by ongoing physical disruptions. The effective closure of Hormuz has disrupted exports and rapidly filled storage tanks, prompting production adjustments at several regional producers. At the same time, Saudi Arabia is accelerating the diversion of shipments via the West Coast and the East-West pipeline to maintain supply.
The market will be monitoring three key variables: a concrete G7/IEA decision on emergency stocks, evidence of the recovery of tanker traffic in Hormuz (including insurance premiums and freight), and the extent of production cuts and refinery disruptions in the Gulf. As long as these physical indicators remain unchanged, oil volatility is expected to remain high.
Source: Newsmaker.id
