Oil Dips as G7 Releases Reserves Amid Middle East Tensions
Oil prices experienced a slight decline on Monday, influenced by rising crude exports from the Middle East and the Group of Seven's decision to release emergency oil reserves. Despite ongoing tensions in the region, including attacks on Gulf oil infrastructure, Brent crude futures dropped by 35 cents, or 0.34%, to $101.90 a barrel, while US West Texas Intermediate crude fell by 62 cents, or 0.68%, to $90.49 a barrel.
The G7's agreement to release 100 million barrels of diesel and crude from emergency reserves, along with a pledge to avoid energy export restrictions, contributed to the price drop. This decision was made after pressure from US President Donald Trump and comes amid a rise in Middle Eastern crude exports, which have surpassed pre-war levels in recent days, despite attacks on vessels in the Strait of Hormuz.
Tim Waterer, chief analyst at KCM Trade, noted that the G7's move has eased some supply concerns, while Saudi export volumes are returning to pre-war levels, albeit at higher costs and via less efficient routes. However, the risks of further damage to energy infrastructure in the Gulf remain a significant factor.
Tensions escalated further as the Yemeni Houthis claimed to have launched ballistic missiles and drones at Saudi Aramco sites in Riyadh and the Khurais area, in response to recent Saudi-led strikes in Yemen. Meanwhile, Saudi Arabia's internationally recognized government announced a major military campaign to retake areas controlled by the Houthis. Additionally, Aramco cut November crude oil prices for Asia to six-year lows.
OPEC+ delayed a review of 2027 oil output quotas due to disruptions caused by the US-Israeli war on Iran, which has thrown future production estimates into uncertainty. In Europe, Ukrainian President Volodymyr Zelenskiy indicated that Ukraine would intensify attacks on Russian oil refineries.