Oil prices drop as G7 reserve release and Middle East exports boost supply
Oil prices dropped on Monday amid rising crude exports from the Middle East and a planned release of emergency oil stocks by the Group of Seven (G7) nations. Brent crude futures fell 72 cents, or 0.71%, to $101.59 a barrel, while US West Texas Intermediate (WTI) crude declined $1.05, or 1.2%, to $90.05 a barrel. The price declines followed the G7's decision to release 100 million barrels of diesel and crude from their strategic reserves, announced on Friday. This move, along with increased Middle Eastern exports, has eased some supply concerns despite ongoing geopolitical tensions.
Shipping data revealed that Middle Eastern crude exports surpassed pre-war levels in four of the seven days ending on September 30. This trend persisted despite attacks on vessels navigating the Strait of Hormuz. Analysts noted that the G7's reserve release and the resumption of near-pre-war export levels from the Middle East are mitigating upward pressure on oil prices. Tim Waterer, chief analyst at KCM Trade, observed that while risks to Gulf energy infrastructure remain, the combination of increased supply and strategic reserves is currently subduing prices.
Tensions in the region persisted, with Yemen's Houthi rebels claiming attacks on Saudi Aramco sites in Riyadh and the Khurais area. Saudi Arabia has not confirmed these attacks. Meanwhile, Yemen's Saudi-backed government launched a major military campaign to retake areas controlled by the Houthis. Additionally, Aramco unexpectedly cut November crude oil prices for Asia to six-year lows. Despite these developments, Brent prices have remained above $100 per barrel due to ongoing geopolitical tensions and increased attacks on commercial vessels in the Gulf.
OPEC+ delayed a review of 2027 oil output quotas for its members, citing disruptions caused by the Iran war. This delay has introduced uncertainty into future production estimates. In Europe, Ukrainian President Volodymyr Zelenskiy announced plans to escalate attacks on Russian oil refineries, adding another layer of complexity to global energy markets.