Oil prices stable as market weighs supply risks, rising Middle East exports

Oil prices remained stable on Tuesday as traders considered potential supply risks, including a rising tide of Middle Eastern crude exports and a forthcoming Group of Seven release of emergency diesel and crude reserves. Brent futures fell 29 cents, or 0.3%, to $100.03 a barrel, while US West Texas Intermediate crude gained 16 cents, or 0.2%, to $89.59, leading the benchmark close to its lowest level since September 22.

Analyst John Evans of oil brokerage PVM noted that the assumption of greater crude flow has softened the impact of higher prices. In the past seven to 10 days, Middle Eastern exporters have shipped approximately 12 million barrels of crude and 2 million barrels of refined products daily, according to Vitol CEO. Saudi Energy Minister Prince Abdulaziz bin Salman announced that oil flowing through the East-West Pipeline to Red Sea export hub Yanbu had reached 5.8 million barrels as of Tuesday morning.

Despite this surge in output, price declines have been capped by the threat of additional Middle Eastern supply interruptions. Saudi Arabia's Jazan and Najran airports were struck in two incidents on Monday night, causing minor damage and injuries, as tensions between Saudi Arabia and Iran-backed Houthi rebels in Yemen intensified.

Saudi forces responded with airstrikes and intercepted a Houthi ballistic missile. The International Energy Agency will convene next week to finalize plans for a diesel stock release, amid uncertainty over the volume of barrels Europe and the US intend to make available to alleviate shortages and soaring prices. The G7's decision to release 100 million barrels of diesel and crude from emergency reserves, along with a pledge to avoid energy export restrictions, has not yet specified the exact quantities or participating nations.

The US Energy Information Administration forecasts a drop in global petroleum production from a 2025 record 106.3 million barrels per day (bpd) to 101.1 million bpd in 2026, while oil demand will decline from 104.4 million bpd in 2025 to 102.4 million bpd in 2026. However, by 2027, production and consumption are expected to rebound to record highs of 109.6 million bpd and 104.6 million bpd, respectively.

In the US, storage reports from the American Petroleum Institute and the Energy Information Administration are anticipated to provide insights into the recent increase in crude stocks, with analysts estimating a 1.8 million barrel rise in US crude storage during the week of October 2, marking the first three-week consecutive increase since August.