Crude oil prices soared further to the highest level since 2014 as the IEA's efforts to release crude oil reserves were not enough to allay fears of supply disruptions in Russia.

On Tuesday, members of the International Energy Agency (IEA), including the US, Japan and the UK, agreed to release 60 million barrels of crude oil from their reserves in an attempt to stem the rapid rise in oil prices.This is the first simultaneous release of oil stocks by IEA since the Libyan civil war in 2011, and the fourth coordinated release of oil reserves by IEA since its establishment in 1974.

Although the group said it would "send a unified and strong message to the global oil market that the conflict between Russia and Ukraine will not lead to supply shortages", the market clearly did not buy it.

The effect of this effort lasted only more than half an hour. After the news, WTI crude oil futures soared again after a short-term dive of more than $1.40.

As of Tuesday's close, WTI April crude oil futures closed up 8.03% at $103.41 a barrel, a new high for one-month contracts since July 22, 2014, and closed above $103.41 for the first time in more than seven years. Brent may crude oil futures closed 7.14 per cent higher at $104.97 a barrel, the highest since Aug. 8, 2014, and closed above $104.97 for the second day in a row.

The release of reserves is a drop in the bucket, there is no hope for OPEC+ to increase production, fears of supply disruptions in Russia and poor progress in Iran's nuclear talks have all added to concerns about crude oil supply shortages.

Reserves release "a drop in the bucket"

According to Reuters, the release of IEA reserves is equivalent to less than a day's global oil consumption.This will only add to concerns that oil supplies will not be enough to make up for growing supply disruptions.

One of the biggest questions facing the market is whether OPEC and its allies, including Russia, will increase production to ease upward pressure on oil prices.

OPEC+ will meet in Austria on Wednesday to discuss plans to increase production in April.It is widely expected that OPEC+ will stick to its original plan to increase oil production by 400000 b / d in April.

While the US has repeatedly asked the Saudi-led OPEC to increase production, so far there is no sign that US pressure can change Saudi strategy.

On the other hand, OPEC is powerless, even if he is willing to do so.At present, analysts are skeptical about the ability of most OPEC members to increase production. According to Barron Weekly, citing Helima Croft, an analyst at Royal Bank of Canada's capital markets, "many OPEC oil-producing countries have run out of capacity."

According to a report by the OPEC Joint Technical Committee, as of January, OPEC+ 's production was 972000 barrels less than its daily production quota. This production gap is a clear indication that OPEC may not be able to save the market by increasing supply.

Risk of supply disruption in Russia

Russia is the world's third largest oil producer, exporting about 5 million barrels of crude oil a day, accounting for about 12 percent of global trade. Russia also exports 2.85 million barrels of oil products a day, according to IEA.

In the context of the conflict between Russia and Ukraine, although US-led sanctions against Russia exempt the energy industryBut the market expects the continuing war to disrupt supply routes through Ukraine and the Black Sea and significantly reduce crude oil inventories.

Maersk, the world's largest container shipping company, has announced that it will suspend booking container shipments to and from Russia, while the UK has banned all ships with any ties to Russia from entering its ports.

Traders are reluctant to trade Russian crude oil at present because of the risk of supply disruption.As a result, the supply of crude oil has been further tightened.

"the main financing institutions of European commodity traders have begun to restrict the financing of commodities trading, and the current difference in oil prices shows that traders are clearly reluctant to buy Russian crude," JPMorgan Chase & Co strategist Natasha Kaneva wrote in a report.

Analysts believe that the implementation of a comprehensive oil embargo on Russia will depend to a large extent on the intensity of the conflict in the next few days, and oil prices may continue to rise if the comprehensive embargo is passed.

"in any case, if a comprehensive oil embargo is imposed on Russia, the potential sources of increased supply in the coming months (Iran's strategic oil reserves and increased US production) will not be sufficient to offset the long-term loss of Russian oil production," Kaneva wrote.

Iran's nuclear talks are not progressing smoothly

In addition to the conflict between Russia and Ukraine, there is another major event that determines the trend of oil prices, that is, the negotiations on the Iranian nuclear agreement, but the latest news shows that the negotiations are not going well.

U.S. state Department spokesman Ned Price said on Feb. 28 that Washington is ready to withdraw from efforts to revive the 2015 Iran nuclear deal if Iran shows intransigence, Reuters reported.

According to the Wall Street Journal,The United States and Iran still disagree on key nuclear issues, and the conflict between Russia and Ukraine could disrupt the process of Iranian nuclear negotiations.

According to the above reports, the differences between the two sides include the scope of the lifting of sanctions by the United States, Iran continues to demand stronger assurances from the United States that it will not withdraw from the agreement again, and the United States wants to ensure that prisoners are exchanged at the same time as the nuclear agreement is resumed. In addition, there was an important resistance at the end of the negotiations when Iran tried to stop the International Atomic Energy Agency (International Atomic Energy Agency) investigation of nuclear material found in Iran.

Over the past few months, Iran has been working to increase its own crude oil production. Iran's crude oil production reached 2.503 million barrels a day in January, according to Platts. According to deputy estimates of the Iranian Oil Company, if the United States removes oil export sanctions against Iran, Iran's production capacity will soon return to 3.8 million-4 million barrels per day.