Oil prices edged lower on Monday as rising Middle East crude exports and a release of oil stocks by the Group of Seven nations boosted supplies. This development offset concerns about further damage to Gulf oil infrastructure amid the US-Israeli war on Iran. At 0240 GMT, Brent crude futures fell 66 cents, or 0.65%, to $101.59 a barrel, while US West Texas Intermediate crude was at $90.12 a barrel, down 95 cents, or 1.03%.
The decline in oil prices came after G7 countries agreed on Friday to release 100 million barrels of diesel and crude from emergency reserves. The nations also pledged to refrain from energy export restrictions, following pressure from US President Donald Trump. This move added to the increase in Middle Eastern crude exports, which rose above pre-war levels in four of the seven days of the final week of September, according to shipping data.
According to Tim Waterer, chief analyst at KCM Trade, the G7 decision to tap strategic reserves is taking some of the immediate supply anxiety out of the price. He also noted that Saudi export volumes are moving back toward pre-war levels, even if those barrels are still moving at higher cost and via less efficient routes. This combination is enough to subdue prices for now, despite the risks of further damage to energy infrastructure around the Gulf region.
The ongoing conflict in the region remains a concern, with the Houthis launching ballistic missiles and drones at Saudi Aramco sites in Riyadh and the Khurais area of Saudi Arabia. In response to 50 Saudi-led air and missile strikes in Yemen in the past 12 hours, the Houthis carried out the attack. However, there was no confirmation from Saudi Arabia. Meanwhile, Yemen's Saudi-backed, internationally recognised government announced a major military campaign to recapture all areas of the country controlled by the Iran-backed Houthis.
In a related development, Aramco has unexpectedly cut November crude oil prices for Asia to six-year lows. Despite this, Brent prices continue to stay above $100 per barrel due to persistent geopolitical tensions and an increase in attacks on commercial vessels in the Gulf, according to ING analysts. The analysts noted that the current situation is affecting the oil market.
The Iran war has disrupted projects to expand capacity across the Middle East, throwing estimates of future production potential into uncertainty. As a result, OPEC+ delayed a review that would determine 2027 oil output quotas for its members, according to two sources close to the matter. This delay adds to the uncertainty in the oil market.
In other news, Ukrainian President Volodymyr Zelenskiy told Reuters in an interview published on Saturday that Ukraine will double down on attacking Russian oil refineries. The ongoing conflicts in the region continue to have an impact on the global oil market, with various factors contributing to the fluctuations in oil prices.
Key points
- The G7 nations agreed to release 100 million barrels of diesel and crude from emergency reserves.
- Middle Eastern crude exports rose above pre-war levels in four of the seven days of the final week of September.
- Brent prices continue to stay above $100 per barrel due to persistent geopolitical tensions.
