Oil prices moved lower on Monday in volatile trading as investors weighed several competing forces across the global energy market.
Recovering Middle East crude exports, a coordinated G7 move to ease supply concerns, and a military offensive by Yemen’s Saudi-backed government all influenced sentiment.
At 14:54 ET, Brent crude futures for December delivery fell 2.2% to $99.99 per barrel. Meanwhile, U.S. West Texas Intermediate crude futures for November dropped 0.5% to $88.95 per barrel.
Yemen Fighting Raises Supply Risk Near Bab el-Mandeb
Tensions in Yemen remain a major source of uncertainty for oil markets.
Fighting between Iran-backed Houthi forces and Yemen’s Saudi Arabia-backed government has intensified near the Bab el-Mandeb Strait, one of the world’s most important shipping routes.
The strait connects the Red Sea with the Gulf of Aden and serves as a key corridor for global oil shipments.
Yemeni government forces launched an operation known as “Dawn of Yemen” on Monday in an effort to retake territory from the Houthis.
Government troops, supported by Saudi air strikes, reportedly regained several key positions, including an airport in the Dhubab district near the entrance to the Bab el-Mandeb Strait.
Forces then continued north toward the city of Mocha.
Oil Shipping Concerns Remain Elevated
The latest offensive follows recent Houthi advances around the strategic waterway.
Those gains had raised concerns that oil tankers traveling through the Bab el-Mandeb Strait could face greater security risks.
Houthi drone attacks last month also targeted Saudi Arabian energy infrastructure.
The attacks temporarily disrupted the kingdom’s East-West Pipeline, an important route that allows Saudi Arabia to transport crude without relying entirely on the Strait of Hormuz.
Middle East Crude Exports Recover
Despite ongoing geopolitical tensions, crude exports from the Middle East have shown signs of recovery.
Kpler data showed that regional crude exports reached at least 16.5 million barrels per day in September.
That brought export volumes back near levels seen before the Iran conflict.
Around 40% of crude exports are now leaving the region without passing through the Strait of Hormuz, according to Kpler. That compares with approximately 17% before the conflict.
TankerTrackers.com also estimated that Middle East exports averaged about 18.13 million barrels per day between September 25 and October 1.
That figure was only around 3.2% below pre-war levels.
Global Oil Inventories Remain Tight
Even with stronger export flows, the broader oil supply picture remains tight.
Saudi Aramco CEO Amin Nasser warned that global oil inventories had fallen to extremely low levels.
He said pressure on the market could continue until the Strait of Hormuz fully reopens.
Saudi Aramco also cut the November official selling price of Arab Light crude for Asian customers by $3 per barrel.
The grade was priced at a $5 discount to the Oman-Dubai benchmark, marking its widest discount since June 2020.
G7 Releases Emergency Oil Reserves
The Group of Seven nations also moved to ease pressure on global energy supplies.
The G7 agreed on Friday to release 100 million barrels of crude oil and fuel products from emergency reserves.
A significant share of the release will consist of diesel and is expected to reach markets within 20 days.
Diesel prices have remained particularly elevated, including record levels in the United States.
Reports also suggested that U.S. President Donald Trump was preparing measures aimed at expanding the use of tax-exempt diesel varieties.
ING analysts said the G7 action reflected growing concerns about tight diesel supplies ahead of the Northern Hemisphere winter.
The move also reduced speculation about a potential U.S. diesel export ban.
OPEC+ Keeps November Production Targets Unchanged
OPEC and its allies added another element to the oil supply outlook.
The group agreed to keep its November production targets unchanged.
OPEC+ is scheduled to hold its next meeting on November 1.
For oil markets, attention is likely to remain focused on Middle East shipping routes, export flows, emergency reserve releases and OPEC+ policy as traders assess whether supply conditions will continue to improve.
