Oil prices fell Monday as traders weighed a planned release of emergency oil and diesel stocks by the Group of Seven countries against renewed attacks around the Strait of Hormuz and persistent Middle East supply risks. December Brent crude futures fell 0.7% to $101.59 a barrel, while December West Texas Intermediate futures dropped 1% to $88.54 a barrel.
The G-7 countries agreed Friday to implement a coordinated release through the International Energy Agency of 100 million barrels of crude oil and fuel over four months, including a substantial diesel release in the first 20 days. The group also pledged not to restrict energy exports between member countries. The IEA said around 325 million barrels of the 400 million barrels pledged under its collective action announced in March have so far been released.
While Middle East crude exports have recovered significantly, refined-product flows remain severely constrained, particularly diesel, the agency said. A staggered release of European fuel stocks could help ease pressure through the winter, but any effect on prices may be short-lived because global markets remain tight and there is little clarity over when Middle Eastern and Russian supplies will normalize, Eleanor Budds at S&P Global Energy CERA said.
Meanwhile, seven members of the Organization of the Petroleum Exporting Countries and its allies, including Saudi Arabia and Russia, agreed Sunday to keep production levels steady in November. Shipping risks around the Strait of Hormuz have increased again, with seven vessel attacks reported since Sept. 28.
Source: Wall Street Journal US Business · Summarized by HeadlinesBriefing