Oil Prices Drop on Rising Exports and G7 Supply Pledge
Oil prices dropped by around USD2 on Monday as Middle Eastern crude exports climbed and the Group of Seven (G7) nations committed to increasing supplies. Brent crude futures fell USD1.93, or 1.89%, to settle at USD100.32 per barrel, while US West Texas Intermediate (WTI) crude lost USD1.68, or 1.84%, closing at USD89.43. Despite attacks in the Strait of Hormuz, shipping data revealed that exports rose above pre-war levels in four of the last seven days of September.
Analysts noted that while tankers remain at risk, the rise in exports could ease market tensions. The G7's pledge to release 100 million barrels of diesel and crude from emergency reserves, following pressure from US President Donald Trump, also contributed to the price decline. However, skepticism persists regarding how much of the promised oil will materialize, as the market remains uncertain about the remaining volumes from the International Energy Agency's earlier 400-million-barrel release.
Geopolitical risks kept the market on edge. Fighting between Saudi Arabia and Houthi forces in Yemen intensified, raising concerns over production disruptions in the key oil-exporting region. Saudi Aramco CEO Amin Nasser warned that crude and refined fuel supplies would stay tight, with stockpile replenishment potentially taking two years. Meanwhile, OPEC+ delayed a review of 2027 output quotas due to uncertainties caused by the Iran war.
Adding to supply concerns, US Strategic Petroleum Reserve inventories fell to their lowest level since 1982. British oil major BP adjusted its refineries to boost diesel production, reflecting the ongoing focus on meeting fuel demand amid constrained supplies.