The Next Oil Rally Could Be Driven by Stockpile Buying
ADNOC, Eni Acquire Stakes In Gas Blocks Linked To Argentina’s LNG Project What I Cover Irina Slav has been writing about global energy markets since 2007, covering the oil and gas industry, energy security, commodities, and the… The war in the Middle East hascostthe world over a billion barrels in cumulative supply losses.
Yet luckily, China had built a reserve of about the same size before the closure of Hormuz, so it stopped buying so much oil, arresting the inevitable price jump.
Now, everyone wants to build an oil reserve—or needs to replenish the ones they already have.
and Israeli attacks on Iran began, prompting the latter to retaliate by closing the Strait of Hormuz, the International Energy Agency said it wouldrelease400 million barrels of crude from its joint emergency reserve.
The reserve was set up, along with the IEA, as a response to the Arab oil embargo and other supply disruptions from the 70s, when the world was even more dependent on Middle Eastern crude than it is today.
The release announced in March worried oil market observers because it was set to be the largest ever made, much larger than what the IEA member states released in 2022 when Western sanctions on Russia following its incursion into Ukraine prompted a price spike.
Back then, the IEA onlyreleased182 million barrels.
Now, member states stood ready to release 400 million barrels, plus millions of barrels from the U.S.
All these millions of barrels would need to be replenished once the crisis is over, or even before it is over if it drags on.
Analysts have been warning about it and about the potential of this replenishment drive to lift international prices, which have remained stubbornly depressed, even amid fresh reports of new strikes between Iran and the United States.
Yet on top of the replenishment drive, there are nations seeking to build their own strategic reserves to insulate themselves from future shocks.Related: Philippines Becomes World's Top Solar Panel Buyer Reuters noted in a recentreportthat nations that had limited oil reserves at home had felt the pain from the closure of Hormuz more sharply than those with ample reserves.
Such a conclusion is, of course, a no-brainer, but it is indicative of something besides the obvious, namely, that crude oil remains the ultimate fuel of the global economy, regardless of the acceleration of transition efforts in the past decade.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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