Oil Prices Dip as Middle East Exports and G7 Stockpile Release Ease Supply Fears

Oil prices fell over 2% on Tuesday as concerns about supply disruptions eased due to rising Middle Eastern crude exports and a G7 emergency stockpile release. Gulf oil flows, excluding Iran, reached over 81% of pre-war levels in September. Saudi Arabia reported that oil pumped through the East-West Pipeline, which was targeted by a drone attack last month, had recovered to 5.8 million barrels. Brent crude futures dropped $1.70, or 1.7%, to $98.62 a barrel, while US West Texas Intermediate crude futures declined $1.83, or 2.1%, to $87.60.

Market sentiment improved as Saudi-backed Yemeni forces advanced to retake coastal areas around the Bab el-Mandeb Strait, reducing fears of supply disruptions. John Evans of oil broker PVM noted that the increased crude exports and secure pipeline operations had dampened price volatility. 'The success of Saudi-backed Yemeni forces in retaking lands lost to Houthi rebels is playing a part in keeping the East-West pipeline secure,' he said.

Despite the positive developments, lingering security risks in the region kept some market nervousness in check. ING analysts highlighted that Gulf producers were adapting to the situation, with Kuwait producing at 75% of pre-war levels and Saudi Arabia cutting the official selling price of its Arab Light crude for November loadings in Asia. Additionally, the G7's decision to release 100 million barrels of diesel and crude from emergency reserves further eased supply concerns.

The conflict between Saudi Arabia and Houthi forces continued to pose risks, with recent attacks on Saudi airports in Jazan and Najran injuring three people and causing limited damage. The ongoing hostilities underscored the persistent uncertainty in the region's oil supply dynamics.