WTI Dips Below $90 as G7 Releases Emergency Oil Reserves

West Texas Intermediate (WTI) oil prices extended their decline for the second straight day, dropping to around $89.30 during Asian trading on Monday. The drop followed an agreement among G7 nations to release 100 million barrels of crude and diesel from emergency reserves. The move aimed to stabilize markets amid pressure from former US President Donald Trump to avoid energy export restrictions. Despite ongoing geopolitical tensions, regional crude exports briefly surpassed pre-war levels, peaking at 22.5 million barrels per day in late September, compared to an average of 18 million barrels per day before the conflict.

The decline in oil prices also stemmed from the OPEC+ decision to maintain steady production targets for November. Key producers like Saudi Arabia, Russia, Iraq, and others are currently operating well below their quotas due to export disruptions linked to the conflict involving the US, Israel, and Iran. Geopolitical instability further escalated as Saudi-backed forces launched a major military offensive in Yemen to reclaim territory from Houthi forces, following weeks of heightened tensions.

Analysts at Rabobank noted that Brent crude prices had retreated last week as improved flows through the Strait of Hormuz and the partial restoration of Saudi Arabia’s East-West pipeline eased supply concerns. However, they cautioned that the deployment of another aircraft carrier to the Middle East could disrupt this recovery, highlighting that geopolitical risks remain a significant factor in oil price movements.