Oil slips on rise in Middle East crude exports and G7 stocks release

Oil prices edged lower on Monday after crude exports from the Middle East increased and the Group of Seven nations pledged to boost supplies, though selling was limited by ‌ongoing disruption fears linked to the US-Israeli war on Iran.

Brent crude futures were down $1.10, or 1.08%, at $101.15 a barrel, while US West Texas Intermediate crude was down 89 cents, or 0.98%, at $90.22. 

G7 countries agreed on Friday to release 100 million barrels of diesel and crude from emergency reserves and pledged to refrain from energy export restrictions after pressure from US President Donal Trump.

It was unclear how much of the petroleum in the new G7 release agreement would come from what remains of the March pact — an emergency release of 400 million barrels, coordinated by the International Energy Agency.

IEA Executive Director Fatih Birol said last week that members had released about two-thirds of the 400-million-barrel agreement. The G7 plan to release crude and diesel over the next four months only provides short-term relief and do little to address structural constraints facing refined products, said Saxo Bank analyst Ole Hansen.

The release will add to Middle Eastern crude exports, which rose above pre-war levels in four of the seven days of the final week of September, shipping data showed on Monday, despite attacks on vessels passing through the Strait of Hormuz.

British oil major BP has adjusted its refineries to focus on producing more diesel, CEO Meg O’Neill told the Energy Intelligence conference in London on Monday.

“A truce in the Middle East remains elusive, and ‌renewed hostilities between Saudi Arabia and the Iran-backed Houthis will ensure that attacks on energy infrastructure and vessels will continue, keeping the geopolitical risk premium at an elevated level,” said PVM Oil Associates analyst Tamas Varga.

Saudi Aramco  CEO Amin Nasser told the Energy Intelligence conference that he expected crude oil and refined fuel supplies to remain stretched and that refilling global stockpiles after emergency withdrawals might take two years.

Inventories of crude oil in the US Strategic Petroleum Reserve fell to 283 million barrels last week, the lowest since October 1982, according to data released by the Department of Energy on Monday.

The fighting between Saudi Arabia and Iran-backed Houthis in Yemen continued to heighten concerns about production at the top exporter in the region.

Yemeni government forces attacked Houthi positions in the Dhubab district overlooking the strategic Bab el-Mandeb Strait on Monday, two military sources said, a day after the internationally recognised government launched a campaign to retake Houthi-held territory.

OPEC+ delayed a review that would determine 2027 oil output quotas for its members after the Iran war disrupted projects to expand capacity across the Middle East, throwing estimates of future production potential into uncertainty, said two sources close to the matter. Aramco, meanwhile, unexpectedly cut November crude oil prices for Asia to six-year lows.