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

Oil prices dropped nearly 2% on Tuesday as supply concerns eased following increased crude exports from the Middle East and a G7 agreement to release emergency stockpiles. Brent futures fell $1.84, or 1.8%, to $98.48 per barrel, while US West Texas Intermediate (WTI) crude declined $1.42, or 1.6%, to $88.01. These declines put Brent on track for its lowest close since September 8 and WTI for its lowest since August 31.

John Evans, an analyst at oil broker PVM, noted that the price of Brent has settled around $100 per barrel as concerns about supply disruptions have temporarily eased. Vitol's CEO reported that around 12 million barrels per day of crude and 2 million bpd of refined products have left the Middle East in the past 7 to 10 days. Saudi Energy Minister Prince Abdulaziz bin Salman confirmed that oil pumped through the East-West Pipeline reached 5.8 million barrels by Tuesday morning.

Despite these declines, oil prices remain supported by the potential for further supply disruptions in the Middle East. Saudi Arabia's airports in Jazan and Najran were targeted in attacks on Monday, escalating tensions with Yemen's Iran-backed Houthis. The Saudi-backed Yemeni government forces launched a major offensive to retake territory from the Houthis, with Riyadh increasing airstrikes in support.

The International Energy Agency is set to meet next week to finalize details of a diesel stock release, amid growing market confusion over the volumes Europe and the US plan to make available. The G7 agreed to release 100 million barrels of diesel and crude oil from emergency reserves but did not specify the breakdown of volumes or participating countries. In the US, analysts estimated that energy firms added 1.8 million barrels of crude to storage during the week ended October 2.