Oil Prices Swing on Middle East Exports and G7 Supply Pledge

Oil prices saw a modest increase on Monday, driven by rising crude exports from the Middle East and the G7's plan to release additional supplies. Brent crude futures climbed 16 cents to $102.41 per barrel, while US West Texas Intermediate crude fell 90 cents to $90.21. The volatility in prices reflected concerns over ongoing geopolitical tensions in the Middle East, particularly the US-Israeli conflict with Iran.

The G7's agreement to release 100 million barrels of diesel and crude over the next four months provided short-term relief, but analysts noted it did little to address structural constraints in refined products. Saxo Bank analyst Ole Hansen highlighted that the focus on diesel and crude supplies alone would not solve the underlying issues in the fuel market. Meanwhile, ICE gasoil futures surged more than 2% to $1,391 per metric ton, as BP adjusted its refineries to prioritize diesel production.

Supply concerns remained elevated, with Saudi Aramco's CEO Amin Nasser warning that crude and refined fuel supplies would stay tight, and it could take two years to replenish global stockpiles after emergency withdrawals. The uncertainty was further compounded by OPEC+ delaying a review of 2027 oil output quotas due to the Iran war disrupting expansion projects. Additionally, Saudi Aramco cut November crude oil prices for Asia to six-year lows, potentially signaling softer demand.

Geopolitical risks persisted, with Houthi attacks on Saudi Aramco sites in Riyadh and Khurais, although there was no immediate confirmation from Saudi Arabia. Yemeni government forces also launched attacks on Houthi positions near the strategic Bab el-Mandeb strait. Ukrainian President Volodymyr Zelenskiy added to the supply concerns by stating that Ukraine would continue targeting Russian oil refineries.