Today, the IEA released the largest amount of oil in history, but oil prices actually became more expensive—this is directly related to your holdings.

Conclusion first: IEA announced the release of 40 billion barrels of oil reserves (the largest scale in history), but $Us Brent Oil(BNO.US) rose by +4.76% to $92 instead of falling, and broke $100 again today. On the same day, the clean energy ETF $iShares S&P Global Clean Energy(ICLN.US) hit a record high.

These two events happening simultaneously are not a coincidence; the underlying logic is directly related to your holdings.

First, understand what happened

IEA (International Energy Agency, an organization of 32 member countries responsible for coordinating global energy security) announced yesterday the release of 40 billion barrels of oil reserves, the largest emergency action since the agency's establishment in 1974. The US contributed 17.2 billion barrels, with release starting next week.

The background is that the Strait of Hormuz remains almost completely closed to navigation. Yesterday, three more cargo ships were hit by missiles, and a drone fell near Dubai airport. The US Navy sank 16 Iranian mine-laying vessels, but navigation remains disrupted.

Why didn't the 40 billion barrel reserve suppress oil prices? (Understanding this is more important than the oil price itself)

There are three reasons. First, the reserve is being released at a historical rate of about 1.4 million barrels per day, but the daily shortfall at Hormuz exceeds 20 million barrels (about 20% of the world's oil passes through here) — this only fills about 1/14 of the shortfall. Second, it takes 60-90 days from the announcement for the reserve to actually reach the market, a case of 'distant water cannot quench a nearby fire'. Third, and most crucially: the IEA's largest action in history is essentially telling the market that they themselves believe the problem is serious.

Positive news turning negative upon implementation — what the market is telling you

This is a classic market mechanism: when a 'major positive' is implemented and the price rises instead, it indicates the problem is bigger than the positive. Historically, during the 2022 Russia-Ukraine war, the IEA released 18 billion barrels, resulting in gasoline becoming only 17-42 cents cheaper. This 40 billion barrel release won't be much more effective than that.

The February CPI looks good, but the real test hasn't started

The February CPI data released last night showed a year-on-year increase of +2.4%, and core CPI +2.5% (CPI: Consumer Price Index, a core indicator measuring the rate of price increase), all in line with expectations.

But analysts are almost unanimously warning: this is the calm before the storm. Because oil prices only started soaring at the beginning of March, and none of the increase from $67 to $100 is reflected in yesterday's CPI data. Some institutions predict that if oil prices remain around $100, CPI could surge to 3.5% by year-end.

On the same day oil hit $92, clean energy hit a record high — this is a signal worth remembering

ICLN (the clean energy ETF, a fund holding stocks of new energy companies like solar and wind) hit a record high yesterday, up 55% over the past year.

In theory, a sharp rise in oil prices should benefit traditional energy and hurt new energy. But the market gave the opposite answer. The logic is: the Hormuz crisis has made the world realize again that the biggest risk of fossil fuels is not their price, but their potential disruption. Solar and wind are local; they don't need to pass through any straits.

When oil price volatility is most intense, the most dangerous move is not chasing energy, but being led by the rhythm of oil prices — chasing in last week, wanting to run this week, back and forth.

I didn't adjust my positions today. But I did two things: added clean energy to my watchlist, and tightened my energy position limit from 8% to 6%. VIX is at 24.23, my reduction trigger level of 32 was not hit.

The next most important time point is the Fed's interest rate meeting on March 18th. Before that, don't chase energy just because oil prices are rising, and don't think inflation is fine just because CPI 'met expectations'. Wait for Powell's statement before deciding the next step.

The 40 billion barrel reserve sounds like a lifeline, but the market's reaction tells you: it's not putting out the fire, it's admitting how big the fire is.

From the beginning of March until now, has your trading rhythm been led by oil prices? If so, how many times? Tell us in the comments.