Oil dropped on Wednesday after a report said International Energy Agency has proposed the largest release of oil reserves in its history. The dollar edged lower.

The release would exceed the 182 million barrels of oil that IEA member countries put onto the market in two releases in 2022 when Russia launched its full-scale invasion of Ukraine, the Wall Street Journal report said.

On Tuesday, oil suffered its steepest one-day slide in four years as mixed signals from the Trump administration on the Iran war spiked volatility across markets. Volatility spiked as US Energy Secretary Chris Wright erroneously posted — and then deleted — a message that the US Navy had escorted an oil tanker through the Strait of Hormuz, only for the White House to concede no such operation had occurred.

Equity markets also experienced volatility, with the S&P 500 Index fluctuating between gains and losses, only to end the session down 0.2%. Asian shares rose 0.8% at the open, while sentiment for the artificial intelligence trade got a boost as Oracle Corp. shares jumped 8% in after-market trading on better-than-expected revenue.

The swings in energy markets added to pressure on Treasuries with bond traders starting to bet more on losses, dumping bullish futures positions as oil’s surge sparked inflation worries. The Bloomberg Dollar Spot Index held its losses from the New York session.

“Traders continue to get whipsawed by intense price action and extreme volatility in crude, with headlines driving sharp intraday swings,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “It very much feels like a market trading in the fog of war, reacting in real time as events unfold, rather than one moving in an orderly fashion.”

The conflict, in its second week, showed no signs of easing with President Donald Trump warning Iran against laying mines in the key energy chokepoint after news reports suggested it was either preparing to, or had already begun doing so. Meanwhile, Group of Seven nations asked their main energy agency to prepare scenarios for the release of emergency oil reserves.

Brent crude prices have risen almost 50% since the start of the year as the effective closure of the strait, which typically handles a fifth of global oil flows, forces producers to curtail output. Tuesday’s move lower came on expectations that world leaders would intervene before the worst of any supply shock emerges.

“While traders welcomed the sudden drop in oil prices, the geopolitical backdrop remains far from stable, leaving markets vulnerable to further volatility,” said Fawad Razaqzada at Forex.com. “Ultimately, the biggest factor for markets will be whether energy supplies from the region resume normally.”

In other corners of the market, gold held on to gains from the prior session, trading just under $5,200 an ounce. Treasuries continued to decline, with the yield on the benchmark 10-year rising six basis points to 4.16% on Tuesday.

“The conflict in the Middle East and related headlines are still the major source of fluctuations in markets, with equities, oil, and rates all spending another day trying to find equilibrium,” said Sameer Samana at Wells Fargo Investment Institute. “We would continue to try and look through those near-term headlines.”

As Wall Street was rattled by oil volatility, traders geared up for inflation data due after the latest jobs report challenged perceptions the labor market is stabilizing.

The consumer price index report on Wednesday is projected to show a core inflation measure, which strips out volatile food and energy costs, rose just 0.2% last month. That would suggest some easing in price pressures before the outbreak of the war in Iran introduced new uncertainty about the inflation outlook.

While the report has lost some of its importance given recent moves in energy prices, any additional signs of inflationary pressures could sound the “death-knell” for rate cut expectations this year, according to David Morrison at Trade Nation.