Oil prices experienced a decline on Monday, with Brent crude futures falling $1.20, or 1.17 percent, to $101.05 a barrel, and US West Texas Intermediate crude declining $1.16, or 1.27 percent, to $89.95 a barrel. This drop was attributed to rising crude exports from the Middle East and plans by the G7 to release 100 million barrels from emergency reserves. According to shipping data, Middle Eastern crude exports had risen above pre-war levels on four of the seven days in the final week of September.
The G7 agreed on Friday to coordinate the release of 100 million barrels of crude and diesel from emergency reserves through the International Energy Agency over four months. A substantial portion of the diesel release will be front-loaded into the first 20 days. The group also pledged to refrain from imposing energy export restrictions among G7 members and called on other producers to avoid measures that could further tighten global supply.
Despite the easing in prices, concerns over the security of oil production and transportation infrastructure across the Middle East remain. Saudi Aramco Chief Executive Officer Amin Nasser stated that global crude and refined-product supplies remained tight, warning that rebuilding inventories depleted during the crisis could take as long as two years. Industry executives have also pointed to a significant loss of crude and refined-product supplies during the conflict.
The US Strategic Petroleum Reserve has also fallen to historically low levels, with data from the US Department of Energy showing stocks at about 283 million barrels last week, the lowest level since October 1982. This leaves governments with less emergency stock available to respond to another major supply shock while efforts are already under way to stabilise fuel markets.
Renewed fighting in Yemen has added fresh risk to oil routes, with Saudi-backed government forces launching an offensive against Iran-backed Houthi forces around the Bab el-Mandeb Strait. The Bab el-Mandeb is a major route for global energy shipments, and renewed fighting around the strait adds another layer of geopolitical risk to a market already dealing with disruptions around the Strait of Hormuz.
OPEC+ has postponed a review of members’ oil-production capacity that will help determine the group’s 2027 output quotas. The review, initially expected to be completed by the end of September, has been pushed back to mid-November after the conflict involving Iran disrupted projects aimed at expanding production capacity across the Middle East.
The developments in the oil market are influenced by the wider Middle East conflict, which continues to impact global oil flows. The market is experiencing competing signals, with higher exports and emergency stock releases easing immediate supply concerns, while geopolitical tensions, depleted strategic inventories, and uncertainty over future OPEC+ capacity continue to limit the scope for a sustained decline in prices.
Key points
- Oil prices fell due to rising Middle East exports and G7 plans to release 100m barrels from emergency reserves.
- G7 to release 100 million barrels of crude and diesel from emergency reserves over four months.
- Supply risks remain elevated due to attacks around the Strait of Hormuz and Bab el-Mandeb.
