Oil Prices Slide 2% as Middle East Supply Fears Ease

Oil prices dropped nearly 2% on Tuesday as concerns about Middle Eastern supply disruptions eased. The decline came amid reports of increased crude exports from the region and an agreement by the Group of Seven (G7) nations to release emergency diesel and crude stockpiles. Brent futures fell $1.84, or 1.8%, to $98.48 a barrel, while US West Texas Intermediate (WTI) crude declined $1.42, or 1.6%, to $88.01.

Analyst John Evans of oil broker PVM noted that Brent's price had dipped below the $100-per-barrel mark due to reduced supply concerns. The CEO of commodity trading giant Vitol reported that around 12 million barrels per day of crude oil and 2 million bpd of refined products had left the Middle East in the past 7 to 10 days. Saudi Energy Minister Prince Abdulaziz bin Salman also confirmed that oil pumped through the East-West Pipeline had reached 5.8 million barrels as of Tuesday morning.

Despite the price declines, the possibility of further supply disruptions in the Middle East limited the downward momentum. Saudi Arabia's airports in Jazan and Najran were targeted in attacks on Monday, escalating tensions with Yemen's Iran-backed Houthis. The International Energy Agency is set to meet next week to finalize the details of a diesel stock release, as market confusion grows over the volumes Europe and the US plan to make available.

The G7 agreement to release 100 million barrels of diesel and crude oil from emergency reserves did not specify the breakdown of volumes or participating countries. In the US, the oil market awaited weekly storage reports from the American Petroleum Institute and the US Energy Information Administration, with analysts estimating a 1.8 million barrel increase in US crude stocks.