Oil prices drop as G7 releases emergency stocks and Middle East exports rise
Oil prices dropped during Asian trading on Monday as rising crude exports from the Middle East and the G7's plan to release emergency oil stocks eased some supply concerns. The Brent crude contract for December delivery fell 0.7% to $101.58 per barrel, while the West Texas Intermediate (WTI) for November slipped 1.1% to $90.14 per barrel.
The Group of Seven nations agreed on Friday to release 100 million barrels of crude and fuel products from emergency reserves, with a significant portion of diesel set to be released within 20 days. This move aims to stabilize energy markets amid supply disruptions caused by the ongoing war involving Iran.
Meanwhile, Middle Eastern crude exports surpassed pre-war levels on four days in late September, according to reports citing Kpler data. Exports ranged between 19.5 million and 22.5 million barrels per day during that period, with a seven-day moving average of 18.5 million barrels per day as of October 1, up from the pre-war average of 18 million barrels per day. The recovery in exports has been supported by increased flows through the Strait of Hormuz and alternative routes, despite ongoing shipping risks.
Geopolitical tensions continued to impact the market, with Yemen’s Iran-aligned Houthis claiming to have launched missiles and drones at Saudi Aramco facilities. Saudi Aramco also cut its November Arab Light official selling price to Asia by $3 a barrel, marking the widest discount since June 2020, in an effort to defend market share amid higher freight costs. Additionally, OPEC+ decided to keep November production targets unchanged, with their next meeting scheduled for November 1.