Oil Prices Steady Amid Competing Forces of Supply and Geopolitical Risks
Oil prices remained steady on Tuesday, with Brent crude settling just above $100 per barrel and WTI near $89.50. The market was influenced by three competing forces: the restoration of Saudi export capacity, the planned release of emergency reserves by the G7, and ongoing geopolitical tensions in the Middle East.
Saudi Arabia reported that flows through the East-West Pipeline, which supplies the Red Sea export hub of Yanbu, had nearly reached 6 million barrels per day, close to its full capacity of 7 million bpd. This followed a recent attack on the pipeline. Vitol's CEO noted that around 12 million bpd of crude and 2 million bpd of refined products had left the Middle East in the past week, aiming to ease price pressures.
The G7 agreed to release 100 million barrels of diesel and crude from emergency reserves, with further details to be discussed by the International Energy Agency next week. Meanwhile, Houthi attacks on Saudi airports and an explosion on Iran's Qeshm Island kept prices supported. Additionally, a potential cyclone in the Gulf of Mexico posed a risk to offshore production and refining.
Analysts anticipate a US crude inventory build of nearly 2 million barrels for the week ending October 2, which would mark the third consecutive weekly increase. The EIA is set to release official figures on Wednesday at 10:30 am ET. The long-term outlook suggests a tight market, with global petroleum output expected to decline this year before recovering in 2027.