Oil prices struggled for direction on Monday as recovering crude exports from the Middle East and plans by the Group of Seven nations to release 100 million barrels from emergency reserves eased some of the supply pressure that has kept the market elevated.
Brent crude oil, against which Nigerian crude oil is priced, edged five cents higher to $102.30 per barrel at about 10:00 am Nigerian time, while United States West Texas Intermediate crude declined 49 cents, or 0.5 percent to $90.62 per barrel.
Both benchmarks had fallen more than one percent earlier in the session, indicating a market increasingly caught between improving physical crude supply and persistent geopolitical risks across the Middle East.
The latest pressure on prices followed an agreement by G7 countries to release a combined 100 million barrels of crude oil and diesel from emergency reserves.
The countries also pledged to avoid restrictions on energy exports, potentially allowing more petroleum products to reach a global market that has been struggling with tight fuel supplies.
At the same time, crude exports from the Middle East have recovered strongly despite continuing attacks on vessels operating around the Strait of Hormuz.
Shipping data showed that Middle East crude exports exceeded pre-war levels on several days during September with the seven-day moving average reaching approximately 18.3 million barrels per day by September 30.
That was above the roughly 18 million barrels per day averaged during the 12 months before the conflict began.
The recovery has been driven partly by Saudi Arabia increasing shipments through both the Red Sea and the Gulf, while Iraq has also resumed some tanker movements through the Strait of Hormuz.
The additional barrels are beginning to ease concerns that prolonged disruptions in the region could leave refiners without sufficient crude supplies.
However, the improvement in crude flows has not removed the geopolitical risk hanging over the market.
Attacks on commercial vessels have increased, with at least seven incidents reported over the past week, including strikes that reportedly damaged two tankers operating around the Strait of Hormuz.
Fresh tensions have also emerged between Saudi Arabia and Iran-aligned Houthi forces after the Houthis said they attacked Saudi Aramco facilities in Riyadh and Khurais.
The combination has prevented oil prices from falling sharply despite the recovery in exports and planned emergency stock releases.
Pressure remains particularly pronounced in refined petroleum products.
ICE gasoil futures rose more than four percent to about $1,409 per metric tonne on Monday as China’s suspension of petroleum-product exports tightened supplies in Asia.
This has created an unusual situation in which crude availability is improving while parts of the refined-fuel market remain constrained.
Saudi Arabia has meanwhile unexpectedly reduced the official selling price of its flagship Arab Light crude to Asian customers for November.
Saudi Aramco set Arab Light at a discount of $5 per barrel to the Oman/Dubai benchmark average, its widest discount to Asian buyers since June 2020.
The reduction was significantly different from market expectations that Saudi Arabia could increase prices and adds another sign that crude suppliers are competing to maintain market share as export volumes recover.
Despite the additional supply, the global oil market remains vulnerable to further disruption because the Strait of Hormuz continues to operate under significant security risks.
The waterway normally handles roughly one-fifth of global crude oil and liquefied natural gas supplies, making sustained disruption capable of quickly reversing the recent easing in oil prices.
For oil-importing countries such as Nigeria, a sustained decline in international crude prices could eventually ease the cost of imported petroleum products, although lower crude prices could simultaneously reduce government oil revenue and foreign-exchange earnings.
The direction of prices will therefore depend increasingly on whether recovering Middle East exports and emergency stock releases can continue to offset the risk of renewed attacks on tankers, pipelines and other energy infrastructure.