Oil prices edged lower on Monday as rising Middle East crude exports and a coordinated release of emergency oil stocks by the Group of Seven nations boosted global supplies, offsetting lingering concerns about further damage to Gulf energy infrastructure amid the US-Israeli war on Iran.
Brent crude futures fell 66 cents, or 0.65%, to $101.59 a barrel at 0240 GMT, while US West Texas Intermediate crude was at $90.12 a barrel, down 95 cents, or 1.03%.
Brent gave up most of its gains last week while WTI ended 1.6% lower after G7 countries agreed on Friday to release up to 100 million barrels of diesel and crude from emergency reserves over the next four months and pledged to refrain from energy export restrictions following pressure from US President Donald Trump.
The coordinated release, to be carried out through the International Energy Agency, will prioritise large volumes of diesel in the first 20 days, according to a joint statement issued after a virtual meeting of G7 leaders. G7 members also agreed to coordinate refinery maintenance schedules across member states to avoid simultaneous capacity shutdowns, and called for the immediate and full restoration of navigation rights in the Strait of Hormuz.
“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 combination is enough to subdue prices for now even though the risks of further damage to energy infrastructure around the Gulf region haven’t gone away.”
Middle East exports rebound
The reserve release adds to Middle Eastern crude exports, which rose above pre-war levels in four of the seven days in the final week of September, shipping data showed on Monday, despite continued attacks on vessels passing through the Strait of Hormuz.
Data from ship-tracking firm Kpler showed that Saudi Arabia, the UAE, Iraq, Oman, Qatar, Kuwait and Iran exported a combined average of nearly 16.33 million barrels per day in September, compared with about 19.51 million bpd before the Iran conflict erupted in February. Kpler estimated that Middle East crude exports had recovered to roughly 80% of pre-war levels.
Crude flows through the Strait of Hormuz alone were projected to reach nearly 9.72 million bpd in September, with Saudi Arabia alone dispatching 19 very large crude carriers — each capable of carrying 2 million barrels — through the chokepoint last week. Kpler noted the figures excluded vessels that had switched off their automatic identification system transponders to evade detection.
The recovery in exports has come at a cost. About 40% of current crude flows now bypass the Strait of Hormuz via Saudi and UAE pipelines, according to Kpler, as traders seek to avoid the increasingly dangerous waterway where at least 68 attacks on commercial vessels have been recorded since the war began, resulting in at least 20 deaths, according to the International Maritime Organization.
Houthi strikes, Saudi price cuts
The Houthis said on Sunday they launched ballistic missiles and drones at Saudi Aramco sites in Riyadh and the Khurais area of eastern Saudi Arabia in retaliation for 50 Saudi-led air and missile strikes in Yemen over the previous 12 hours. Houthi military spokesperson Yahya Sarea claimed both operations “achieved their objectives” and caused large fires, though there was no confirmation from Saudi Arabia.
The attacks came as Yemen’s Saudi-backed, internationally recognised government said on Sunday it was launching a major military campaign to recapture all areas of the country controlled by the Iran-backed Houthis, marking one of the sharpest escalations in the conflict in years.
In a further sign of shifting market dynamics, Saudi Aramco unexpectedly cut its November crude oil prices for Asia to six-year lows. The state oil company set the official selling price for its flagship Arab Light crude at $5 a barrel below the average of Oman and Dubai prices for November, down $3 from the previous month, according to a price list. Traders and refiners had expected a $5 increase. Aramco also cut the November OSPs for its heavier Arab Medium and Arab Heavy grades sold to Asia by $5 a barrel. The surprise move underscored intensifying competition for market share as Gulf producers race to place barrels amid rising flows through the Strait of Hormuz.
OPEC+ delays capacity review
Meanwhile, OPEC+ has delayed a review that would determine 2027 oil output quotas for its members after the Iran war disrupted projects to expand production capacity across the Middle East, throwing estimates of future production potential into uncertainty, according to two sources close to the matter.
The capacity assessment, which was originally due to be completed by the end of September 2026, is now expected to conclude by mid-November, the sources said. The review is being conducted by US-based oil consultancy DeGolyer and MacNaughton, which is assessing production capacity for OPEC+ members excluding Russia, Iran and Venezuela — all of which are subject to US sanctions. At its last general meeting in June, OPEC+ confirmed the “importance of completing the assessment of maximum sustainable production capacity” of all member countries as a basis for determining production levels for 2027.
Brent prices continued to stay above $100 per barrel on persistent geopolitical tensions and an increase in attacks on commercial vessels in the Gulf, ING analysts said in a note.
Ukraine vows more refinery strikes
In Europe, Ukrainian President Volodymyr Zelenskiy told Reuters in an interview published on Saturday that Ukraine will double down on attacking Russian oil refineries in response to Moscow’s new aerial bombardment doctrine aimed at forcing civilians to flee Kyiv and other cities.
“We have to respond in any way we can,” Zelenskiy said, adding that oil refineries would be among the priority targets because they generate revenue for Russia’s war effort. Ukraine’s General Staff has reported a string of successful long-range strikes on Russian energy infrastructure in recent months, including an attack on a refinery in Russia’s Samara region in September.
The combination of rising Middle East supply, coordinated reserve releases and uncertainty over future OPEC+ production capacity has left traders weighing near-term bearish signals against persistent geopolitical risks that continue to underpin prices above the $100 mark. Bank of America raised its Brent forecast for the second half of 2026 to $95 per barrel from a previous estimate of $83, while Standard Chartered lifted its 2026 average Brent forecast to $92 per barrel, reflecting expectations that geopolitical risk premiums will remain elevated.
