Oil prices dip but stay above $100 on geopolitical risks and supply concerns
Oil prices retreated on Monday, but Brent crude remained above $100 due to persistent geopolitical risks. Brent crude traded near $101.50 a barrel, while West Texas Intermediate hovered around $90.10. The decline came after the Group of Seven (G7) announced a coordinated release of 100 million barrels of crude and fuel products over four months, alongside OPEC+’s decision to keep November production targets unchanged.
The G7 plan aims to ease tensions in the refined fuels market, particularly diesel, rather than flood the market with crude. A significant portion of the release will be diesel, with the first tranche expected within 20 days. European gasoil and US diesel futures dropped sharply after the announcement, reflecting the recent shift in energy market stresses.
Despite the bearish signals, Brent crude remains above $100 due to persistent risks in refined fuels and shipping. Middle East exports have rebounded, averaging about 18.5 million barrels a day by October 1, slightly above the pre-war average of 18 million. However, vessel attacks around the Strait of Hormuz have increased, with at least seven incidents since September 28, threatening to disrupt supply.
Analysts note that improved Hormuz flows and the partial restoration of Saudi Arabia’s East-West pipeline have eased supply fears. However, OPEC+ production remains below quota, supporting higher oil prices. The next move in oil prices will depend on whether the recovery in Gulf exports holds and if G7 barrels arrive smoothly. Any escalation or refinery disruption could quickly reverse the current trend.