Oil Prices Dip as G7 Releases Barrels and Middle East Exports Rise
Oil prices saw a slight decline on Monday as crude exports from the Middle East increased and the Group of Seven (G7) nations pledged to release additional supplies. Brent crude futures fell US$1.10, or 1.08%, to US$101.15 a barrel, while US West Texas Intermediate crude dropped 89 US cents, or 0.98%, to US$90.22. The G7 agreement, announced on Friday, involves releasing 100 million barrels of diesel and crude over the next four months, aiming to ease supply concerns amid ongoing geopolitical tensions.
The G7's move follows a previous emergency release of 400 million barrels coordinated by the International Energy Agency (IEA) in March. IEA Executive Director Fatih Birol noted that about two-thirds of that amount had already been released. However, analysts like Ole Hansen from Saxo Bank argue that the new release will only provide short-term relief and fail to address deeper structural constraints in refined product supplies.
Middle Eastern crude exports have rebounded above pre-war levels despite attacks on vessels passing through the Strait of Hormuz. British oil major BP has adjusted its refineries to produce more diesel, according to CEO Meg O’Neill. Meanwhile, Saudi Aramco CEO Amin Nasser expects crude and refined fuel supplies to remain tight, with global stockpiles taking up to two years to replenish after emergency withdrawals. The US Strategic Petroleum Reserve fell to its lowest level since October 1982, highlighting ongoing supply concerns.
Tensions in the Middle East continue to escalate, particularly between Saudi Arabia and Iran-backed Houthi forces in Yemen. Yemeni government forces attacked Houthi positions near the strategic Bab el-Mandeb Strait, raising fears of further disruptions to oil production. OPEC+ has delayed a review of 2027 oil output quotas due to the uncertainty caused by the Iran war, which has disrupted expansion projects across the region. Additionally, Aramco unexpectedly cut November crude oil prices for Asia to six-year lows.