The roller coaster ride continues on the week, with oil prices now starting to nudge back higher today. There was much drama and a real mess yesterday amid conflicting headlines. As the US tries to play down the situation in the Strait of Hormuz, we started to see some underhanded tactics come out.

The headlines:

It’s an absolute mess and oil prices were sent for a ride lower before coming back up as traders tuned out the fiasco.

The technicals show that buyers haven’t thrown in the towel just yet. That despite a steep decline from near $120 to below $80 at one point yesterday. The move was ultimately defended by the 200-hour moving average (blue line).

And with the attempted push back above the 100-hour moving average (red line) now, we are seeing buyers looking to seize back the near-term momentum in oil price action.

So, what’s next to watch out for?

As the US-Iran conflict rages on, one can safely assume that the status quo will remain in the Strait of Hormuz for a while longer. Despite what US officials might claim, Kpler data said that there were only seven vessels (four tankers and three bulk carriers) that have crossed the Strait of Hormuz since 6 March as of yesterday.

Putting that on a pin for now, the next key thing to watch out for will be the IEA emergency oil reserves release – likely to be announced later today or this week.

We already know that they are touting a big, big number. That somewhere along the lines of 300 million to 400 million barrels in total. But again, the main focus should be on how they plan on navigating that figure.

As mentioned before, it could still take weeks for this oil supply to make its way to refineries and that is what markets need to consider.

Sure, the total amount seems staggering and much more than even what we saw in the 2022 oil market crisis (roughly 240 million barrels by both the US and IEA combined).

However, just be mindful that the release of these oil supply and barrels will be in stages. So, there are going to be many questions to factor in.

• How many barrels is the IEA going to draw down from its reserves in the first few weeks?
• How quickly can these barrels make its way to transport and be shipped to where it needs to go?
• What is the mix in crude quality that will be involved with the release?
• Who is going to handle all the logistics and make sure that these barrels can reach refineries in a timely manner?
• Are refineries able to handle the sudden surge when they all come at one go?

It’s not as simple as saying that the 300 million to 400 million barrels will cover everything. There’s a lot more to it and that will be what really influences the outlook for the oil market as the Middle East conflict stretches on for longer.