WTI Slips as G7 Reserve Release Adds to Supply Risk

Key Moments

G7 Reserve Action Weighs on WTI

West Texas Intermediate (WTI), the U.S. crude oil benchmark, is quoted around $88.60 in early Asian trading on Tuesday, with prices under pressure as supply expectations rise. Traders are reacting to higher Middle Eastern crude exports and a coordinated release of oil from the Group of Seven (G7) strategic reserves.

On Friday, the G7 agreed to deploy 100 million barrels of diesel and crude from emergency stockpiles and committed to avoid restrictions on energy exports following pressure from U.S. President Donald Trump. According to data released Monday, this move comes as Middle Eastern crude exports surpassed pre-war levels on four out of the seven days in the final week of September.

Policy Moves and Market Commentary

Late Monday, Trump signed an executive order easing restrictions on the use of a tax-exempt category of diesel, according to Bloomberg. Trump stated that the measure would “officially waive the off-road requirement and allow anyone to purchase tax-free, red-dyed diesel for any reason.” The measure is described as his latest effort to reduce fuel costs ahead of November’s midterm elections.

Market analysts note that the G7 decision is influencing sentiment. “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,” said Tim Waterer, chief analyst at KCM Trade.

Waterer added, “That combination is enough to subdue prices for now even though the risks of further damage to energy infrastructure around the Gulf region haven’t gone away.”

Inventory Data in Focus

Traders are positioning ahead of the American Petroleum Institute (API) weekly crude oil stockpiles release later on Tuesday. A crude draw larger than forecasts would point to stronger demand and could support WTI, whereas a bigger-than-expected build would hint at softer demand or oversupply, pressuring prices.

Geopolitical Backdrop and Middle East Risk

Yemen’s Houthi group claimed on Monday that it had conducted three military operations targeting two airports, an oil installation, and military sites in Saudi Arabia. Heightened tensions in the region may help limit further losses in WTI, as markets assess risks to energy infrastructure and transport routes.

Rabobank Flags Escalation Risk Around Iran

Analysts at Rabobank caution that the “U.S. War in Iran is about to reach a new stage of escalation,” a scenario they expect will keep oil prices supported even as crude continues to move through the Strait of Hormuz. They warn that such flows could lull markets into “a new sense of complacency.”

The bank’s Energy Markets team stresses that “the current shuttle system is still fragile,” highlighting that “key targets like terminals and refineries providing Iran with ripe opportunities to re-exert their grasp over the Strait of Hormuz’s energy flows,” and emphasizing that the perceived stability of regional supply lines may be misleading.

Technical Picture: Neutral-to-Bearish Bias

On the daily chart, WTI US Oil is consolidating after a recent pullback, holding above the lower Bollinger Band support and the 100-day moving average (MA), while remaining constrained below the middle Bollinger Band. This setup, combined with a 14-day Relative Strength Index (RSI) near 46 and pointing lower, signals waning bullish momentum and a neutral-to-bearish near-term tone as long as price stays under the mid-band.

A decisive move below the Bollinger lower band near $85.58 and the 100-day MA around $84.35 would signal scope for a deeper downside correction.