Oil prices mixed as WSJ reports IEA proposed largest release of oil reserves in its history

• France to host G7 leaders call today
• American crude oil, gasoline, and distillate stocks fell.
• Brent futures trade up 11 cents, or 0.13% higher, at $87.91 a barrel.

Oil prices seesawed on Wednesday after the Wall Street Journal reported the International Energy Agency has proposed the largest release of oil reserves in its history to offset supply disruptions stemming from the war in Iran.

Brent futures traded up 11 cents, or 0.13% higher, at $87.91 a barrel at 0129 GMT. US West Texas Intermediate (WTI)  traded 7 cents higher and was last up 0.08%, at $83.52 a barrel.

Both contracts dropped immediately after the WSJ report, reversing early gains in WTI.

The IEA's proposed drawdown would exceed the 182 million barrels of oil that IEA member countries put onto the market in two releases in 2022 when Russia launched its full-scale invasion of Ukraine, the WSJ said, citing officials familiar with the matter.

The IEA and the White House did not immediately respond to Reuters' requests for comment.

The US and Israel pounded Iran on Tuesday with what the Pentagon and Iranians on the ground called the most intense airstrikes of the war.

The US military also "eliminated" 16 Iranian mine-laying vessels near the Strait of Hormuz on Tuesday, the US Central Command said, as US President Donald Trump warned any mines laid in the Strait by Iran must be removed immediately.

Trump has repeatedly said the US is prepared to escort tankers through the Strait of Hormuz when necessary. However, sources told Reuters the US Navy has refused requests from the shipping industry for military escorts as the risk of attacks is too high for now.

"We continue to expect crude oil to remain highly volatile, driven by headlines while trading within a wide range between $75ish and $105ish in the sessions ahead," Tony Sycamore, market analyst with IG in Sydney, said in a note.

Both contracts plunged more than 11% on Tuesday, the steepest percentage drop since 2022, a day after Trump predicted a quick end to the war, and after surging to a session high above $119 a barrel, their highest since June 2022, on Monday.

G7 officials have since gathered online to discuss a potential release of emergency oil stockpiles to soften the market blow.

French President Emmanuel Macron will host a video call with other G7 country leaders on Wednesday to discuss the impact of the conflict in the Middle East on energy and measures to address the situation.

Abu Dhabi state oil giant ADNOC has shut its Ruwais refinery in response to a fire at a facility within the complex following a drone strike, according to a source, marking the latest energy infrastructure disruption due to the US-Israeli war on Iran.

Saudi Arabia, the world's largest oil exporter, is seen boosting supplies via the Red Sea, although they are still far below the levels needed to compensate for the drop in flows from the Strait of Hormuz, shipping data showed.

The kingdom is relying on the Red Sea port of Yanbu to help it boost exports to avert steep production cuts as its neighbours, Iraq, Kuwait and the United Arab Emirates have already reduced output amid the US-Israeli war with Iran.

Energy consultancy Wood Mackenzie said the war is currently cutting Gulf oil and oil products supply to the market by some 15 million barrels per day, which could raise crude prices to $150 per barrel.

"Even a quick resolution probably implies weeks of disruption for energy markets yet," Morgan Stanley said in a note.

Reflecting higher demand, US crude, gasoline and distillate stocks fell last week, market sources said, citing American Petroleum Institute figures on Tuesday.