G7 Reserve Release Sends Oil Prices Lower
Global crude oil prices dropped on Monday as the G7's plan to release 100 million barrels from oil reserves helped ease supply concerns. The move, part of coordinated measures to stabilize energy supplies, also included coordinating refinery maintenance schedules and encouraging higher refined-product output. International benchmark Brent crude futures for December delivery fell 0.5% to $101.72 per barrel, while US benchmark West Texas Intermediate (WTI) crude futures for November delivery dropped 1% to $90.19 per barrel.
The G7 announced the release of 100 million barrels of diesel and other oil reserves over four months following an online meeting of leaders on October 2. The group aims to shield households and businesses from price shocks and strengthen global energy systems. The IEA will assess whether additional diesel stocks should be released if needed. The G7 also called for increased joint efforts regarding the Strait of Hormuz.
Expectations of a tight monetary policy from the US Federal Reserve through the end of the year added downward pressure on oil prices. Market pricing indicated an above-80% probability that the Fed will leave interest rates unchanged this month, with elevated expectations for a 25-basis-point rate hike in December. Concerns that further rate increases could slow economic activity and oil demand reinforced the decline in prices.
The decision by seven OPEC+ members not to implement an additional production increase in November limited the decline in oil prices. The countries agreed to maintain their September production levels in November, extending the decision not to increase output beyond October. The group will continue to hold monthly meetings to assess market conditions, with the next meeting scheduled for November 1.