Crude oil cools after 4-day rise, hovers around $102/bbl: Key factors influencing market

Crude oil benchmarks fell more than 1.0 per cent on Monday in anticipation of more supplies, snapping a four-day winning run that took the rates beyond three-year peaks.

Brent was last seen trading 1.2 per cent lower at $101.9 per barrel while West Texas Intermediate was down 2.8 per cent at $94.1 per barrel at the last count.

Last week, crude oil rates soared to their highest since July 20222, with Brent touching $106-odd levels.

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Key factors that pushed crude oil rates higher

Persistent tensions in the Middle East, with a closure of the Strait of Hormuz -- a crucial maritime region connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea -- pushed crude oil rates higher. Most analysts have warned of volatility running into the short term with no end to the West Asia conflict in sight.

The US-Israel-Iran conflict has entered its third week, since joint US-Israel strikes against Tehran that killed Iran's Supreme Leader Ali Khamenei.

Khamenei's death immediately triggered Tehran's retaliatory strikes against several countries in the region, with Iran particularly targeting countries hosting American bases.

Iran's new leader, Mojtaba Khamenei, has vowed to maintain the blockade of the Strait of Hormuz amid the ongoing conflict. Under President Donald Trump, the US is pushing back strongly with plans for military action to reopen the passage.

Mojtaba has indicated that Iran will use the Strait of Hormuz closure to its favour, asking its Middle Eastern neighbours to stop hosting American assets, according to foreign media reports.

The US president claimed last week that there was “practically nothing left” for US forces to target in Iran after weeks of intense strikes.

What sent crude oil rates falling on Monday?

According to foreign media reports, International Energy Agency (IEA) member nations could release more oil stocks "as and if needed", after agreeing to the largest-ever reserve release last week.

IEA Executive Director Fatih Birol reportedly said that more than 1.4 billion barrels of supplies will still remain in emergency reserves even after the release, with the current release set to reduce the body's emergency stockpiles by around 20 percent.

The news comes at a time when crude oil supplies from IEA nations are already flowing into Asian markets.

Formed in 1974, the Paris-based energy watchdog IEA has 32 member countries.

IEA's big announcement last week

Member nations of the IEA unanimously agreed last week to release an unprecedented 400 million barrels of crude oil from their emergency reserves. That decision was taken at an extraordinary meeting of 32 member nations the previous day.

The move was aimed at tackling disruptions in the oil market stemming from the Middle East conflict.

Analysts said those IEA supplies were set to stabilise crude oil prices.

Welcoming the IEA's decision, the Indian government had said that it was closely monitoring the situation in global energy markets, particularly in the Middle East.

India is an Associate Member of the IEA and an active participant in international energy cooperation.