Oil dips after G7 agrees to release 100M barrels

Oil prices fell on Monday, October 5. Traders weighed a Group of Seven plan to release 100 million barrels of crude and diesel from emergency reserves, along with Middle East exports that have climbed back above prewar levels on several days. Even so, Brent crude stayed above \$100 a barrel because the U.S.-Israeli war on Iran keeps threatening Gulf energy infrastructure.globalbankingandfinance+1

Reuters reported that Brent futures fell 66 cents, or 0.65%, to \$101.59 a barrel by 0240 GMT. U.S. West Texas Intermediate dropped 95 cents, or 1.03%, to \$90.12. Brent has now given back most of last week's gains.globalbankingandfinance

A front-loaded diesel push

G7 leaders agreed to the plan after a video call on Friday, October 2, chaired by French President Emmanuel Macron. Their joint statement called for a coordinated release through the International Energy Agency "to begin immediately over 4 months, including a frontloaded substantial diesel release within the first 20 days". The leaders also pledged not to restrict energy exports between G7 countries. They urged other producers to avoid export bans too.Abcnews+1

The deal followed a week of pressure from President Donald Trump, who had threatened a U.S. ban on diesel exports. Bloomberg reported that the amount of new supply could be much smaller than 100 million barrels. Two European diplomats said the total includes barrels pledged under the IEA's record 400-million-barrel release in March that have not yet reached the market. Euronews calculated that 100 million barrels spread evenly over four months would come to about 830,000 barrels a day. G7 members said they would meet within the IEA in the coming days to consider releasing more diesel.EFE.com+2

Exports recover, risks remain

Shipping data showed Middle Eastern crude exports rose above prewar levels on four of the seven days in the last week of September, despite attacks on ships in the Strait of Hormuz.globalbankingandfinance

"The G7 decision to tap strategic reserves is taking some of the immediate supply anxiety out of the price," said Tim Waterer, chief analyst at KCM Trade. He added that Saudi barrels were "still moving at higher cost and via less efficient routes".globalbankingandfinance

New risks are also appearing. Yemen's Houthis said they fired missiles and drones at Saudi Aramco sites in Riyadh and Khurais. Saudi Arabia has not confirmed the attacks. On Sunday, Yemen's internationally recognized government announced a campaign to retake areas the Houthis control. Separately, Aramco cut its November crude prices for Asian buyers to six-year lows, and OPEC+ delayed a review of 2027 output quotas.globalbankingandfinance

Goldman Sachs The Goldman Sachs Group, Inc. ↘ 1.01% has said oil could climb to \$120 a barrel if attacks on ships intensify, or fall back toward \$80 if exports return to normal. JPMorgan ↗ 0.00% analysts were less certain: "We simply don't know how to model the endgame".economictimes