BY COMFORT OGBONNA
Oil prices fell on Monday as increased crude exports from the Middle East and a planned release of emergency oil stocks by Group of Seven nations helped ease immediate concerns about global supplies, even as the conflict involving the United States, Israel and Iran continued to threaten energy infrastructure across the region.
Brent crude futures fell 72 cents, or 0.71%, to $101.59 a barrel by 0634 GMT. U.S. West Texas Intermediate crude was down $1.05, or 1.2%, at $90.05 a barrel.
The decline came after oil prices lost much of their earlier gains last week. Brent ended the week lower, while WTI fell 1.6%, as traders assessed the potential impact of additional supplies entering the market.
The G7 agreement to release 100 million barrels of crude and diesel from emergency reserves has helped reduce some of the immediate pressure on oil markets. The countries also pledged not to impose restrictions on energy exports, responding to concerns that prolonged disruptions could tighten supplies and push prices significantly higher.
The additional stockpiles are expected to supplement growing crude exports from the Middle East. Shipping data indicated that regional crude exports exceeded pre-war levels on four of the seven days during the final week of September, despite attacks and heightened security risks involving vessels traveling through the Strait of Hormuz.
The Strait is one of the world’s most important energy shipping routes, and any sustained disruption could have a significant impact on global oil supplies and prices.
While crude prices moved lower, refined fuel markets remained under pressure. ICE gasoil futures rose more than 2% on Monday to $1,390.25 a barrel, reflecting continued concerns about refined-product availability and transportation risks.
The combination of additional strategic reserves and higher exports from major Middle Eastern producers has reduced some of the immediate supply concerns that had pushed oil prices sharply higher during the conflict.
“The G7 decision to tap strategic reserves is taking some of the immediate supply anxiety out of the price, while there’s a growing view 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,” said Tim Waterer, chief analyst at KCM Trade.
That additional supply has helped limit the upward pressure on crude prices for now, although the risk of further attacks on oil facilities and other energy infrastructure remains a major concern for traders.
The security situation in the region remained tense on Monday. Yemen’s Iran-backed Houthi movement said it had launched ballistic missiles and drones toward Saudi Aramco facilities in Riyadh and the Khurais area of Saudi Arabia. The group said the attacks were carried out in response to dozens of Saudi-led air and missile strikes in Yemen over the preceding 12 hours.
There was no immediate confirmation from Saudi authorities regarding the reported attacks.
The developments followed an announcement by Yemen’s internationally recognized, Saudi-backed government that it was preparing a major military campaign aimed at retaking territory controlled by the Houthis.
The escalation adds another layer of uncertainty to an already fragile regional energy market. Any expansion of the conflict could threaten oil production, processing facilities or shipping routes, potentially reversing the recent increase in available supplies.
Saudi Arabia’s state oil company has also unexpectedly lowered its November crude prices for Asian customers to their lowest levels in six years. The reduction signals increased competition for market share and comes as producers attempt to navigate shifting demand, changing trade routes and elevated geopolitical risks.
Despite Monday’s decline, Brent crude remained above $100 a barrel, reflecting the premium investors continue to place on geopolitical risk.
Analysts said persistent tensions in the Middle East, combined with a rise in attacks involving commercial vessels in the Gulf, were likely to keep oil prices elevated even if physical supplies remained relatively resilient.
The outlook for future production has also become less certain after OPEC+ delayed a review that was expected to help determine oil production quotas for 2027.
The delay comes as the conflict has disrupted several projects intended to expand production capacity across the Middle East. The uncertainty surrounding those projects makes it more difficult for producers and traders to assess how much additional oil could be available in the coming years.
Meanwhile, the conflict involving Russia and Ukraine is adding another source of uncertainty to the global energy market. Ukrainian President Volodymyr Zelenskiy has said Ukraine plans to intensify attacks on Russian oil refineries, potentially putting additional pressure on Russian refining capacity and global fuel markets.
For investors, the competing forces of rising exports and emergency stock releases on one side and escalating geopolitical risks on the other are likely to remain the dominant factors influencing crude prices.
The G7 stock release provides a temporary cushion against supply disruptions, while higher Middle Eastern exports suggest that physical oil availability remains stronger than feared. But continued attacks around the Gulf, risks to shipping through the Strait of Hormuz and possible damage to production infrastructure could quickly tighten the market again.
With Brent still above $100 a barrel, traders are expected to remain highly sensitive to developments across the Middle East and any signs that the conflict is beginning to affect the region’s ability to produce and transport crude.
Original article
Comments