The crude oil prices rose to over $120 per barrel after Saudi Aramco's fuel distribution facilities were attacked by Iranian-aligned Houthi rebels in Yemen. However, OPEC and allied oil producers decided to increase crude oil production on Thursday, and the Biden administration is planning the largest ever draw from its emergency oil reserve. These moves drove a sharp decline in the oil prices, with Brent crude futures trading 5% lower at $107.69 per barrel Thursday afternoon, while U.S. West Texas Intermediate futures fell 5.4% to $101.96.
Nevertheless, analysts at UniCredit bank said the impact of such moves on prices "is usually short-lived" because reserves are finite, and the production shortfall is open-ended. Once reserves fall below a certain level, the market might anticipate insufficient supply to offset a continuing shortfall, and prices could go back up.
