WTI Slides as G7 Reserves Release Tempers Supply Fears

Key Moments

WTI Under Pressure After G7 Emergency Reserves Move

West Texas Intermediate (WTI) crude futures continued to retreat for a second consecutive session, changing hands near $89.30 during Asian trading on Monday. The latest pullback followed a decision by G7 countries to draw down 100 million barrels of crude and diesel from emergency stockpiles, in an effort to alleviate global supply strains. The group also committed to refrain from imposing energy export controls after facing pressure from US President Donald Trump.

Despite ongoing regional conflict, crude exports from the affected area briefly climbed above pre-war levels in late September, with flows reaching as much as 22.5 million barrels per day, according to Kpler data. That compares with a pre-war average of 18 million barrels per day over the period from March 2025 to February.

OPEC+ Holds Output Targets, But Exports Lag Quotas

Oil prices also came under pressure after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) opted to keep existing production targets in place for November. The outcome was broadly aligned with market expectations that any significant policy changes would be postponed until next year.

However, actual supply remains constrained. Major producers including Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan, and Oman continue to produce well below their assigned quotas. Overall exports are reported at only 60% to 80% of normal levels, with volumes curtailed by persistent disruptions tied to the conflict involving the US, Israel, and Iran.

Conflict-Driven Disruptions Around Bab el-Mandeb

Geopolitical tensions in the region have intensified. Saudi-backed forces in Yemen have launched a significant offensive aimed at retaking territory from Houthi fighters. This military push comes after a period of escalating frictions in which the Iran-aligned Houthis seized control of the Bab el-Mandeb strait.

The strait, which links the Red Sea to the Gulf of Aden, had been a vital alternative route for Saudi crude shipments seeking to bypass the Strait of Hormuz. Its capture underscores a key chokepoint risk for maritime energy flows and adds another layer of uncertainty to Middle Eastern supply routes.

Brent Cools as Some Supply Fears Ease, But Risk Premium Persists

Brent crude prices have softened as some physical bottlenecks show tentative signs of improvement. Analysts at Rabobank observe that Brent crude prices have “retreated last week as improved Hormuz flows and the partial restoration of Saudi Arabia’s East-West pipeline eased supply concerns,” pointing to early signs of stabilization in the physical market.

At the same time, Rabobank highlights that the geopolitical backdrop remains highly fragile, noting that “the deployment of another aircraft carrier to the Middle East threatens to disrupt the recent recovery,” and emphasizing that political and security risks are still a major factor that could halt or reverse the recent decline in prices.

Market Snapshot: Key Supply Metrics