Oil prices fall as G7 plans emergency reserve release and Middle East exports rebound

Oil prices dropped on Monday as the Group of Seven agreed to tap emergency stockpiles and crude flows out of the Middle East rebounded, easing some immediate fears over fuel supply.

Brent crude futures slipped to around $101 to $102 a barrel, while West Texas Intermediate fell toward $88 to $90 a barrel. The downturn reflects a shift in market attention from absolute physical scarcity to a coordinated injection of supply from major consuming economies.

What the G7 agreed to do

G7 finance ministers agreed to release 100 million barrels of crude oil and refined fuel products over four months. The operation, coordinated through the International Energy Agency, targets refined fuels quickly: a substantial portion of the diesel stocks will be released within 20 days to soften pressure on Northern Hemisphere heating and transport markets ahead of winter.

Member nations also committed not to place restrictions on cross-border energy exports among themselves. According to the IEA, around 325 million barrels of an earlier 400-million-barrel collective action announced in March have already reached the market. The agency noted that while crude availability has picked up, diesel and refined product supplies remain under severe pressure.

Middle East crude exports rebound

Regional exports from the Persian Gulf have shown resilience despite active military exchanges. Data from tracking firm Kpler showed Middle Eastern crude shipments pushed past pre-war volumes on four days in late September, peaking between 19.5 million and 22.5 million barrels per day. The seven-day moving average reached 18.5 million barrels a day by 1 October, exceeding the baseline pre-war figure of 18 million.

Much of that recovery reflects Saudi Arabia rerouting supplies and restoring transit routes. Saudi shipments traversing the Strait of Hormuz grew from roughly 1.4 million barrels a day in late August to 4.1 million barrels a day last week, according to Kpler. The kingdom's East-West pipeline has also returned to pumping roughly 5.5 million barrels daily after being knocked offline by mid-September drone strikes, freeing up about 4 million barrels a day for tanker loading at the Red Sea port of Yanbu.

Saudi Aramco responded to the changing flows by lowering its official selling price for November Arab Light to Asian buyers by $3 a barrel, setting its discount to the Oman-Dubai benchmark at $5 — its widest markdown since June 2020.

Attacks continue along the Strait of Hormuz

The price drop has been checked by persistent maritime attacks. United Kingdom Maritime Trade Operations said an unknown projectile struck a tanker's engine room in the Strait of Hormuz on Sunday. The crew was unhurt and no spill occurred, but seven vessel attacks have been recorded near the chokepoint since 28 September.

Yemen's Houthi forces claimed on Sunday that they launched ballistic missiles and drones at Aramco sites in Riyadh and Khurais in retaliation for coalition airstrikes. Saudi officials have not confirmed that any strikes landed.

On the supply-management side, OPEC+ confirmed over the weekend that its November output quotas will stay unchanged, though the cartel postponed an upcoming review to set 2027 baselines because regional warfare has halted planned capacity additions.