Crude oil prices extended their decline on Tuesday as improving Middle Eastern oil flows and plans by the Group of Seven (G7) to release emergency stockpiles eased immediate concerns over global supply shortages.
As at the time of writing at 08:15 (WAT), Brent crude was trading at $99.67 per barrel, down 0.65 per cent, while US West Texas Intermediate (WTI) stood at $88.57 per barrel, down 0.96 per cent.
The decline came as traders responded to signs that crude exports from major Middle Eastern producers are recovering despite the continuing disruption around the Strait of Hormuz. Data cited by Reuters showed that Gulf oil shipments excluding Iran recovered to more than 81 per cent of pre-war levels in September, reducing the immediate supply pressure that had pushed Brent above $100.
Further pressure came from the G7’s decision to release 100 million barrels of crude and fuel from emergency reserves, with substantial diesel volumes expected to be released first. The move is intended to increase available supplies and contain the sharp rise in fuel prices caused by the Middle East conflict.
Saudi Arabia has also signalled a softer physical crude market by cutting the official selling price of its Arab Light crude to Asian buyers for November loading. The reduction takes the grade to a $5-per-barrel discount to the regional benchmark, compared with a $2 discount for October. The move is being interpreted by traders as an indication that Gulf producers are seeing improved supply availability while competing for market share.
The recovery in Middle Eastern flows has become particularly important for the market because producers have found alternative routes to move crude while shipments through the Strait of Hormuz remain vulnerable to disruption. Reuters reported that regional crude exports exceeded pre-war levels on some days in late September, although shipping costs, insurance and security risks remain elevated.
Despite the decline, the market remains exposed to significant geopolitical risks. Attacks on shipping around the Gulf and Yemen continue, while uncertainty over the future of the Iran conflict and the status of the Strait of Hormuz is keeping a substantial risk premium in crude prices.
The latest movement therefore reflects a shift in the immediate balance of the market rather than a complete resolution of the supply crisis. Stronger Gulf exports and emergency stock releases are easing concerns over physical availability, but any renewed disruption to Middle Eastern production or shipping could quickly reverse the downward move.
For Nigeria, the direction of international crude prices remains significant because benchmark movements feed directly into the value of Nigerian export grades, landing cost and the revenue outlook for the government and upstream operators.