IEA proposes the largest ever release of oil reserves; global stock markets rebound; Japanese and Korean stocks close higher; oil prices hold below $90.

IEA proposes the largest ever release of oil reserves; global stock markets rebound; Japanese and Korean stocks close higher; oil prices hold below $90.

The International Energy Agency (IEA) plans to launch the largest release of strategic crude oil reserves in history, injecting a boost into the recently turbulent global financial markets.

According to a Wallstreetcn article, the IEA proposes the largest ever release of strategic crude oil reserves to counter the energy price shock triggered by the Middle East conflict. Boosted by this news, the MSCI Asia Pacific Index rose 1.2%, the tech sector gained 3.2%, and Oracle shares surged 8% after hours. Meanwhile, the dollar fell for a fourth consecutive day, U.S. Treasury prices rose, the 10-year yield inched down one basis point to 4.14%, and gold extended its gains, trading near $5,200 per ounce.

However, the market rally subsequently narrowed. According to the Financial Times, JPMorgan informed private credit institutions that it had written down certain loans and tightened lending, stoking concerns over credit quality. European stock index futures edged lower, and U.S. stock futures narrowed their gains to 0.2%.

Trump warned Iran not to lay mines in the Strait of Hormuz, while earlier U.S. Energy Secretary Chris Wright mistakenly posted and then deleted a message about the U.S. Navy escorting tankers through the strait, heightening market volatility. Investors are now awaiting U.S. inflation data to be released later in the day to seek direction.

S&P 500 futures rose 0.3%. Nasdaq 100 futures rose 0.2%.Nikkei 225 closed up 1.4% at 55,025.37 points. Japan TOPIX closed up 0.9% at 3,698.85 points. South Korea’s KOSPI closed up 1.4% at 5,609.95 points.Japan’s 10-year government bond yield fell 2.5 basis points to 2.155%.U.S. Treasury prices rose, 10-year yield edged down one basis point to 4.14%.Dollar spot index fell 0.2%.Gold traded near $5,200 per ounce.West Texas Intermediate crude rose 0.4% to $83.77 per barrel.Bitcoin fell 0.7% to $69,749.85.

Reserve Release News Boosts Market Sentiment

The news of the IEA proposing strategic reserve releases has become the main driver of market rebound. Khoon Goh, Head of Asia Research at ANZ Bank, said, "The market remains alert to the situation in the Middle East, so any news about reserve releases—whether from the IEA, the U.S., or the G7—can offer short-term relief for oil prices."

Brent crude, after recording its largest one-day drop in four years last Tuesday, fell another 0.2% on Wednesday. Joshua Crabb, Head of Asia Pacific Equities at Robeco Hong Kong, said the initial shock to oil prices appears to have been digested, and baseline expectations are trending lower as there is "considerable political will to drive this situation."

However, historical experience shows that reserve releases don’t always deliver the expected effect. In 2022, the two releases initially pushed oil prices higher—as the market interpreted them as a signal that the crisis was worse than expected—before their downward pressure on prices gradually kicked in.

Persistent Geopolitical Risks Fuel Market Volatility

The Middle East conflict has entered its second week with no signs of easing. Trump warned Iran not to lay mines in the Strait of Hormuz, after media reports stated Iran was preparing or had already started such action. The Strait of Hormuz normally accounts for about one-fifth of global oil flows, and its actual blockade status has kept Brent crude rising since the start of the year, forcing oil producers to cut output.

Last Tuesday’s market turmoil was partly triggered by a false report: U.S. Energy Secretary Chris Wright mistakenly posted news that the U.S. Navy was escorting oil tankers through the Strait of Hormuz, then deleted it, and the White House immediately confirmed that such actions never took place. This episode further pressured already fragile market sentiment.

Bloomberg strategist and MLIV team leader Garfield Reynolds pointed out, "Unless shipping through the Strait of Hormuz quickly returns to pre-war levels, energy prices will remain high because the war and the actual blockade are cutting off supply and forcing continuing output cuts."

Fawad Razaqzada at Forex.com said, "Although traders are relieved at the sudden drop in oil prices, the geopolitical context is far from stable, and the market remains vulnerable to further shocks. Ultimately, the deciding factor is whether energy supply in the region can return to normal."

U.S. Inflation Data Becomes Next Key Point

While the Middle East situation continues to disrupt markets, investors are now turning their attention to the U.S. Consumer Price Index (CPI) data to be released later today. The latest jobs report has already shaken market confidence in labor market stability.

Market expectations are for core CPI—excluding the volatile food and energy components—to increase 0.2% month-on-month, indicating that price pressures have eased ahead of the outbreak of Iran war and renewed inflation uncertainty.

Sean Darby of Mizuho Securities said the market "may have been overly optimistic about the overall inflation situation," but with the Middle East conflict, investors will "feel the inflation shock faster and more intensely."

Jun Bei Liu, co-founder and chief portfolio manager of Sydney hedge fund Ten Cap Investment Management, said that while reserve release news brings temporary relief, keeping hedged positions remains prudent. "Maintaining hedges is vital, including allocations to some energy stocks, since the outlook remains extremely uncertain."

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