Oil markets have shown their optimistic side this week, hoping that US President Trump would call of his war soon as the Strait of Hormuz remains blocked and panic-buying is taking over many commodity markets that depend on the Middle East. For the time being, Trump’s market placation has succeeded in lowering oil prices, with ICE Brent falling back to $92 per barrel after a Monday rally that almost reached $120 per barrel.
The IEA has approved releasing 400 million barrels of crude oil reserves in an effort to lower oil prices, the largest emergency release in history. Seeking to calm down soaring oil prices, G7 finance ministers discussed a joint release of strategic petroleum reserves, up to potentially 400 million barrels.
Saudi national oil firm Saudi Aramco has reportedly started cutting crude oil production at two of its giant oilfields, even though it is trying to maximize the re-routing of its flows from the Gulf to the Red Sea via the East-West pipeline. The Middle East has historically low crude storage capacity, accounting for only 5% of global storage (320 million barrels), even though the region represents one-third of global oil flows.
With the closure of the Strait of Hormuz entering its second week, Middle Eastern producers have started to collectively curb output as laden tankers continue to pile up in the Persian Gulf. Saudi Arabia, Iraq, Kuwait, and the United Arab Emirates have already slashed their production by as much as 6.7 million b/day, with Iraq taking the lead with a massive 3 million b/day cut.
Meanwhile, Saudi Aramco posted a 12% drop in annual profit for 2025, reporting a net income of $93.4 billion as the world’s leading NOC has been posting consecutive year-over-year drops for 12 quarters already. With its gearing ratio falling to 3.8% by the end of 2025, Saudi Aramco has now set its sight on its first-ever buyback, pledging to repurchase up to $3 billion worth of shares this year.
India, a country with notoriously low strategic oil inventories as its three SPR sites currently hold only 30 million barrels of crude, will not join the IEA’s initiative to release strategic stocks and will seek to maximize short-haul Russian imports instead. Russia’s main Black Sea port of Novorossiysk has resumed loadings this week, following a week-long halt caused by Ukraine’s drone attacks and stormy weather that slashed oil exports to just 250,000 b/d, bringing some relief to tight oil markets.
/IEA, OilPrice/