Oil Prices Dip on Supply Boost Amid Geopolitical Tensions
Oil prices dropped by nearly $2 on Monday as Middle Eastern crude exports rebounded and the Group of Seven (G7) nations committed to increasing supplies. Brent crude futures fell $1.93, or 1.89%, to $100.32 per barrel, while U.S. West Texas Intermediate crude declined $1.68, or 1.84%, to $89.43. Despite risks to tankers in the Strait of Hormuz, exports rose above pre-war levels in four of the last seven days of September.
The G7 agreed to release 100 million barrels of diesel and crude from emergency reserves within the next four months, with a portion delivered in the next 20 days. However, analysts remain skeptical about the impact, noting uncertainties about how much oil will come from the remaining volumes of the International Energy Agency's (IEA) earlier 400 million-barrel release. IEA Executive Director Fatih Birol stated that members had already released about two-thirds of that amount.
Tensions in the Middle East persisted, with ongoing conflicts between Saudi Arabia and Iran-backed Houthis in Yemen. Saudi Aramco CEO Amin Nasser warned that refilling global stockpiles after emergency withdrawals could take two years. Meanwhile, U.S. Strategic Petroleum Reserve inventories fell to their lowest since October 1982, according to recent Department of Energy data.
OPEC+ postponed a review of 2027 oil output quotas due to disruptions caused by the Iran war, with a subgroup of key members scheduled to meet again on November 1. Additionally, Aramco cut November crude oil prices for Asia to six-year lows.