Oil prices fell on Monday following increased crude oil exports from the Middle East and the release of emergency reserves by G7 countries. Brent crude futures dropped by 66 cents, or 0.65%, to reach $101.59. Meanwhile, West Texas Intermediate in the U.S. also fell by 95 cents, or 1.03%, trading at $90.12.
G7 Agreement and Its Impact on the Oil Market
On Friday, G7 countries agreed to release 100 million barrels of diesel and crude oil from emergency reserves and committed to avoiding energy export restrictions. This agreement came after pressure from Donald Trump, the President of the United States. Tim Waterer, a senior analyst at KCM Trade, noted that the G7's decision to draw from strategic reserves alleviates some immediate supply concerns from prices, and there is a growing view that Saudi Arabia's export levels will return to pre-war levels.
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Market Analysis and Security Situation in the Persian Gulf
Waterer also added that this combination is currently sufficient to contain prices, although the risk of further damage to the Persian Gulf energy infrastructure remains. The Houthis announced that they fired ballistic missiles and drones at Aramco facilities in Riyadh and the Khurais area. Meanwhile, the Yemeni government announced on Sunday that it has launched a major military campaign to retake all areas under Houthi control.
At the same time, Aramco reduced its official selling price of oil to Asia for the upcoming month, contrary to expectations, bringing it to the lowest level in six years. Reports indicate that Middle Eastern crude oil exports exceeded pre-war levels during four of the last seven days of Shahrivar, but attacks on vessels passing through the Strait of Hormuz continue.
ING Bank analysts wrote in a note that Brent prices will remain above $100 due to ongoing geopolitical tensions and increased attacks on commercial vessels in the Persian Gulf. Additionally, two sources close to the matter reported that OPEC+ has postponed a review that would determine member production quotas for the upcoming year.
Read more: Mohsen Paknejad, Minister of Oil of the Islamic Republic, Resigned from His Position · Chinese Government Continues Support for Iran Despite Sanctions
