Oil Prices Ease as G7 Reserve Release and Mideast Supply Recovery Reduce Pressure

Oil prices extended their decline on Monday as the G7’s coordinated emergency stock release and a recovery in Middle Eastern crude exports eased concerns over supply disruptions linked to the US-Israeli war with Iran. However, Brent crude remained above the key $100/bbl level as geopolitical risks, attacks on Gulf shipping routes and ongoing production disruptions continued to keep the market relatively tight.

At the time of writing, December Brent crude futures were down $1.30, or 1.27%, at $100.95/bbl. November WTI futures declined $1.54, or 1.69%, to $89.57/bbl.

G7 to release 100 million barrels from emergency reserves

The latest pressure on oil prices followed the G7’s agreement on Friday to release 100 million barrels of crude and diesel from emergency reserves through a coordinated International Energy Agency action.

The release is expected to start immediately and continue for four months. A significant portion of the diesel is expected to enter the market within the first 20 days. The G7 has not yet provided details on the split between crude and refined products or disclosed how much each member country will contribute.

The decision came after US President Donald Trump urged European countries to tap emergency diesel inventories as his administration attempted to contain rising fuel costs ahead of the November midterm elections. Trump later confirmed that a previously considered US diesel export ban would no longer be pursued.

Fuel markets responded strongly to the news. US diesel futures fell 3.25%, while European benchmark diesel futures dropped by around $83/ton, or 5.75%, after reports of the reserve-release discussions emerged.

Middle Eastern crude exports show signs of recovery

Additional downward pressure came from signs that Middle Eastern crude supplies are gradually recovering. Shipping data cited by Reuters showed regional crude exports exceeded pre-war levels on four of the last seven days of September, despite continued attacks on vessels operating through the Strait of Hormuz.

The improvement has reduced some immediate concerns about physical crude availability. However, export flows remain unstable, while shipping expenses continue to rise because of elevated security risks across the region.

Geopolitical risks remain a major concern. The Houthis claimed to have launched ballistic missiles and drones targeting Saudi Aramco facilities in Riyadh and Khurais following Saudi-led strikes in Yemen. Saudi Arabia had not confirmed the reported attacks at the time.

Meanwhile, Yemen’s Saudi-backed government announced a large-scale operation aimed at regaining territory controlled by the Houthis, creating further uncertainty around regional energy infrastructure and shipping routes.

OPEC+ leaves November production targets unchanged

OPEC+ members made no additional changes to their planned November supply targets at the weekend meeting. Seven key producers — Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan and Oman — agreed to maintain their existing production ceilings, broadly matching market expectations.

Actual production from the Gulf region, however, remains significantly below those targets because of disruptions linked to the Iran conflict.

According to OPEC data, the seven producers pumped approximately 25 million bpd in August, representing an increase of around 630,000 bpd from July. Despite the monthly increase, output remained about 5 million bpd below February’s pre-war level.

Middle Eastern exports have generally remained around 60-80% of normal volumes in recent months. Consequently, a large portion of OPEC+’s planned production increases for 2026 has yet to translate into actual physical supply, keeping the underlying market tighter than headline production targets suggest.

OPEC+ capacity review postponed

The conflict has also created uncertainty around OPEC+’s longer-term production plans. A capacity assessment intended to determine members’ production potential and support the setting of 2027 quotas has been delayed as the conflict disrupted capacity expansion projects across the Middle East.

OPEC+ still has around 2 million bpd of production cuts in place across most members. Major changes to its output strategy are considered unlikely before 2027.

The seven core producers are scheduled to meet again on November 1, when the group will reassess production conditions and its supply policy.

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