Oil Prices Dip but Stay Above $100 Amid Geopolitical Risks

Oil prices saw a slight dip on Monday, driven by the coordinated release of emergency stocks and a rebound in Middle East exports. The Group of Seven announced a plan to release 100 million barrels of crude and fuel products over four months, while OPEC+ decided to keep November production targets unchanged. Despite these measures, Brent crude remained above $100 due to ongoing geopolitical risks in the Gulf.

The pullback in oil prices was attributed to easing fears of an immediate supply shortage. Brent crude traded around $101.50 a barrel, while West Texas Intermediate (WTI) was near $90.10. The G7's plan focuses on cooling the refined fuels market, particularly diesel, with the first tranche set to be released within 20 days. Governments also pledged to avoid export restrictions, which helped reduce prices for European gasoil and US diesel futures.

However, the impact of the G7's release may be limited. Refinery outages and disrupted fuel exports have left diesel inventories tight, meaning the effect will depend on how quickly the released supply reaches end markets. Meanwhile, Middle East exports have rebounded, averaging about 18.5 million barrels a day by October 1, slightly above the pre-war average. This recovery has been facilitated by alternative pipelines and increased traffic through the Strait of Hormuz, although vessel attacks have risen.

Analysts warn that renewed attacks could disrupt supply significantly. OPEC+ maintained existing production ceilings, with core members like Saudi Arabia and Russia set to meet again on November 1. Despite improved flows through Hormuz, actual production remains below quota, supporting Brent's price above $100. The next move in oil prices will depend on the durability of the supply recovery and any potential disruptions.