Oil prices slipped on Monday after the Group of Seven (G7) agreed to release 100 million barrels from emergency reserves, with Brent crude trading at $101.69, down 0.55%, while West Texas Intermediate (WTI) fell 1.04% to $90.16, according to Trading Economics data. The decline comes as G7 leaders agreed Friday to a 4-month release coordinated by the International Energy Agency (IEA) following pressure from US President Donald Trump. As per The Hindu BusinessLine, IEA Executive Director Fatih Birol made these remarks during a G7 Leaders' video meeting on energy security and markets, where discussions focused on continuing pressures in global energy markets, particularly severe constraints in diesel supplies. "Facing unprecedented volatility in oil markets–with surging prices threatening economic stability and the well-being of our citizens–we have agreed on decisive, coordinated measures to stabilise immediate energy supplies," the G7 statement said. The diesel-heavy first phase of the G7 release is due within 20 days, with France, which currently holds the rotating G7 presidency, announcing the release after a videoconference led by President Emmanuel Macron involving G7 nations and EU representation.
Gulf tanker flows have recovered significantly, with crude transits through the Strait of Hormuz hitting a 7-day average of 13.5 million barrels per day in late September, according to CNBC citing Kpler data. Shipments from the wider region, including Red Sea routes, have climbed further, with on 4 of the last 7 days of September topping pre-war levels, as reported by Reuters citing Kpler data. Tim Waterer, chief analyst at KCM Trade, pointed to both factors, noting that "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." The G7's announcement comes after a March commitment by International Energy Agency member countries to release 400 million barrels of oil and products, with European Union countries having committed about 92 million barrels, weighted towards refined products such as diesel. Average US diesel prices at $6.37 per gallon on Friday after hitting a record $6.52 on September 22, according to AAA data.
Bitcoin (BTC) and gold moved against oil on Monday, with BTC rising 1.55% to $86,254 and gold edging up 0.23% to $4,149.70 an ounce, according to BeInCrypto Markets and Reuters data. Both have lagged crude over the past year, with Brent up 55.06% from a year ago while gold has gained 4.71%, while Bitcoin is down 29.4% over the past year. The G7's announcement comes after a March commitment by International Energy Agency member countries to release 400 million barrels of oil and products to stabilise the oil market. The G7 leaders on Friday said the release will begin immediately and continue over four months with "a frontloaded substantial diesel release within the first 20 days" coordinated through the International Energy Agency, with nations agreeing to convene again in the context of the IEA in the coming days to discuss the possibility of additional diesel releases if necessary.
Despite supply improvements, tanker attacks continue to threaten the recovery, with shipping intelligence firm Marisks logging at least 7 incidents near Hormuz, including a reported strike on Kuwaiti tanker Kazimah III, as reported by Reuters. Iranian forces may be firing into a predetermined engagement zone, while on land, the Houthis said they fired ballistic missiles and drones at Saudi Aramco sites in Riyadh and Khurais. IEA Executive Director Fatih Birol noted that crude oil exports from the Middle East have recovered significantly, but refined-product flows remain severely constrained, with Ukrian attacks on Russian refineries further exacerbating the situation for diesel. Jim Krane, energy research fellow at Rice University's Baker Institute, told AP that the move could temporarily reduce retail fuel prices but would also leave Europe with less emergency cover. "Draining stocks will reduce retail fuel prices for a while, at the cost of leaving Europe with less emergency cover," Krane said. "At some point in the future Europe and the rest of the G7 will have to refill their strategic reserves."
