NEW YORK - Oil prices dropped nearly 2 percent Wednesday following reports that Western nations may be considering a release of oil reserves onto the world market. Government data showing an increase in US supplies contributed to the price decline.
Benchmark US crude fell by $1.92 to end at $105.41 per barrel in New York. Brent crude lost $1.38 to finish at $124.16 in London.
US supplies surged last week by twice the amount that analysts were expecting. And French officials said the United States and Europe are thinking of supplying markets with more oil from emergency reserves in hopes of pushing prices lower.
Policy makers are concerned that a prolonged standoff with Iran could disrupt supplies. Western nations fear Iran is developing a nuclear weapon, and they have been putting pressure on the oil-rich nation to open its facilities to inspection. Iran denies the claim, but has turned away international inspectors.
Japan and the European Union have cut back on imports of Iranian oil. An international banking service company has also made it more difficult for Iran to sell oil. Analysts say the potential disruption to shipments from Iran, the world’s third-largest oil exporter, and other oil-producing nations in the region has driven oil prices about $15 per barrel higher than they otherwise would be.
On Wednesday, France’s government said it is considering a release of emergency stockpiles as part of a US-led effort to cool oil prices.
The White House would not say whether the United States had asked France to consider releasing oil from its strategic reserves.
The rise in oil has driven up US gasoline prices by 19 percent this year.