International oil prices edged lower in early trading on Friday. The decline followed the U.S. Treasury Department's issuance of a 30-day license permitting countries to purchase Russian oil and petroleum products currently stranded at sea, which somewhat alleviated market concerns over tight supply.
According to reports, the U.S. Treasury Department announced on March 12 that, amid rising oil prices due to recent Middle East tensions, the United States will temporarily relax sanctions on certain Russian oil.
Brent crude futures were quoted at $100.45 per barrel, while U.S. West Texas Intermediate crude was at $94.36 per barrel. U.S. Treasury Secretary Besant stated that this measure aims to stabilize the global energy market, which has been severely disrupted by the war involving Iran.
However, analysts warn that this easing measure offers only temporary relief and cannot resolve the core issues of the current energy crisis. Iran's new Supreme Leader, Mujtaba Khamenei, stated that Iran will continue its fight and maintain the blockade of the Strait of Hormuz, using it as leverage against the United States and Israel.
The issuance of the license has eased supply concerns, but market opinions are divided. The 30-day license from the U.S. Treasury allows countries to buy Russian oil and products currently stuck on tankers due to sanctions, injecting a degree of supply expectation into the global market.
Yang An, an analyst at Haitong Futures, said, "The license issuance has eased market worries, but it will not solve the most fundamental problem. The most critical factor is the restoration of shipping through the Strait of Hormuz." This statement highlights the core market contradiction: while the temporary easing of restrictions on Russian oil helps replenish some supply gaps, the fundamental risks in the global energy market will persist as long as the situation in the Strait of Hormuz remains unstable.
Just one day before the Russian oil license was issued, the U.S. Department of Energy announced it would release 172 million barrels of crude oil from the Strategic Petroleum Reserve. This plan is coordinated with the International Energy Agency, which has agreed to a record release of 400 million barrels of oil from its member countries' strategic reserves, including the U.S. contribution.
However, according to a report by IG analyst Tony Sycamore, the brief boost from the IEA's reserve release was quickly overshadowed by a dangerous escalation in the Middle East situation. On Thursday, both Brent and WTI crude surged by over 9%, reaching their highest levels since August 2022.
The situation in the Strait of Hormuz continues to deteriorate, exacerbating regional risks. Recent developments in the Middle East continue to pressure the market. Iraqi security officials stated on Thursday that two fuel tankers were attacked by Iranian vessels carrying explosives in Iraqi waters; an Iraqi official told media that the country's oil ports had completely ceased operations.
Oman has evacuated all vessels from its main oil export terminal, Mina Al Fahal, located outside the Strait of Hormuz, as a precautionary measure.
Meanwhile, various parties are taking steps to address the rising risks. Secretary Besant stated in a media interview that the U.S. Navy will provide escorts for vessels transiting the Strait of Hormuz when military conditions permit, potentially as part of an international coalition. It was also reported that Saudi Arabia is paying a premium to reroute tankers to the Red Sea and is utilizing its East-West pipeline to supply oil to the global market.