Oil Prices Decline as G7 Plans to Release 100m from Reserves
Global crude oil prices fell on Monday as the G7’s plan to release 100 million barrels from oil reserves eased supply concerns, while expectations of tighter US monetary policy weighed on prices.
International benchmark Brent crude futures for December delivery decreased 0.5% to $101.72 per barrel, down from $102.25 at the previous close.
US benchmark West Texas Intermediate (WTI) crude futures for November delivery fell 1% to $90.19 per barrel from $91.11.
Following an online meeting of G7 leaders on Oct. 2, the group agreed on coordinated measures to stabilise energy supplies, shield households and businesses from price shocks and strengthen the long-term resilience of global energy systems.
G7 announced its decision to release a total of 100 million barrels of diesel and other oil reserves to help stabilise global energy markets over four months.
Under the measures, G7 countries will coordinate refinery maintenance schedules to avoid simultaneous capacity losses and temporarily increase utilisation rates where possible.
The G7 also said it would engage with countries with high refining capacity to encourage higher global refined-product output, particularly to ease pressure in diesel markets.
G7 members and their partners are expected to release significant volumes of diesel into the market within the first 20 days. The IEA will also assess in the coming days whether additional diesel stocks should be released if needed.
The G7 statement also called for increased joint efforts regarding the Strait of Hormuz.
Expectations that the US Federal Reserve will maintain a tight monetary policy stance through the end of the year are also weighing on oil prices.
Market pricing showed an above-80% probability that the Fed will leave interest rates unchanged at its meeting this month, while expectations for a 25-basis-point rate hike at its final meeting of the year in December remained elevated.
Expectations of further rate increases by the Fed before year-end are reinforcing concerns that economic activity and oil demand could slow, putting downward pressure on prices.
The decision by seven members of the OPEC+ group not to implement an additional production increase in November is limiting the decline in oil prices.
Under the agreement, November crude production targets were set at 10.48 million bpd for Saudi Arabia, 9.95 million bpd for Russia, 4.43 million bpd for Iraq, 2.68 million bpd for Kuwait, 1.63 million bpd for Kazakhstan, 1.01 million bpd for Algeria, and 841,000 bpd for Oman.
The countries agreed to maintain their September production levels in November, extending the decision not to increase output beyond October.
The group will continue to hold monthly meetings to assess market conditions, with the next meeting scheduled for Nov. 1. Iran’s Oil Minister Mohsen Paknejad Resigns
