Oil Prices Dip 2% as Middle East Supply Fears Ease and G7 Releases Stockpiles

Oil prices dropped nearly 2% on Tuesday as supply concerns in the Middle East eased. Increased crude exports from the region and a decision by the Group of Seven (G7) nations to tap into emergency diesel and crude stockpiles contributed to the decline. Brent futures fell $1.84, or 1.8%, to $98.48 a barrel, while US West Texas Intermediate (WTI) crude dropped $1.42, or 1.6%, to $88.01.

Analyst John Evans from oil broker PVM noted that Brent's price had fallen back around the $100 per barrel mark as concerns about supply disruptions eased. Vitol's CEO reported that around 12 million barrels per day of crude oil and 2 million bpd of refined products had left the Middle East in the past week. Saudi Energy Minister Prince Abdulaziz bin Salman also confirmed that oil pumped through the East-West Pipeline had reached 5.8 million barrels as of Tuesday morning.

Despite the price declines, risks of further supply disruptions capped the downside. Saudi Arabia's airports in Jazan and Najran were attacked on Monday evening, injuring three people and causing limited damage. The International Energy Agency (IEA) is set to meet next week to finalize details of a diesel stock release, amid confusion over how much oil Europe and the US plan to release to address shortages and high prices.

In the US, the oil market awaited weekly storage reports from the American Petroleum Institute and the US Energy Information Administration. Analysts estimated that energy firms added 1.8 million barrels of crude to US storage during the week ended October 2, which would mark the first time since August that crude stocks increased for three weeks in a row.