Oil prices stabilize as G7 strategic releases counter rising Middle East exports
Oil prices edged higher in volatile trade 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 gained 16 US cents to US$102.41 a barrel by 7:38 a.m. ET, while U.S. West Texas Intermediate crude was down 90 us cents, or nearly 1 per cent, at US$90.21. Both contracts lost more than 1 per cent earlier in the session.
The Brent benchmark was supported by renewed strength in fuel products, given that the G7 plans to release crude and diesel over the next four months only provide short-term relief and do little to address structural constraints facing refined products, said Saxo Bank analyst Ole Hansen.
ICE gasoil futures were up more than 2 per cent at US$1,391 a metric ton. BP has adjusted its refineries to focus on producing more diesel, Chief Executive Meg O’Neill told the Energy Intelligence conference in London on Monday.
Brent gave up most of its gains last week and WTI was 1.6 per cent lower after G7 countries agreed on Friday to release 100 million barrels of diesel and crude from emergency reserves. They also pledged to refrain from energy export restrictions after pressure from US President Donald Trump.
The release will add to Middle Eastern crude exports, which rose above prewar 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.
“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 Associate analyst Tamas Varga.
Saudi Aramco Chief Executive 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.
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 Houthis said they launched 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. There was no confirmation from Saudi Arabia.
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.
Potentially adding to the lack of refined products, Ukraine will continue to attack Russian oil refineries, Ukrainian President Volodymyr Zelenskiy told Reuters in an interview published on Saturday.
This article was first reported by The Globe and Mail
