Brent crude fell below $98 a barrel on Tuesday as improving Middle East supply and a deeper Saudi discount to Asian buyers look more like an unwinding of part of the market's geopolitical risk premium than a shift in demand. WTI crude fell further still, now down around 15% from its peak over four straight weeks of declines.
Brent crude fell below $98 on Tuesday, extending a slide in energy prices that has given markets some breathing room after last week's sharp repricing. The immediate catalysts were improving Middle East supply availability, a planned G7 release of emergency stocks, and a steep Saudi price cut to Asian buyers.
Saudi Arabia widens the gap between Asia and Europe
Saudi Aramco cut the November official selling price of Arab Light to Asia to $5 below Oman/Dubai, from a $3 discount previously — the widest discount since June 2020. At the same time, prices to Northwest Europe and the Mediterranean were raised. That regional contrast suggests the Asian cut looks more like an attempt to defend market share than a blanket signal of collapsing global demand.
Supply recovery trims the war premium
The Saudi move landed alongside a broader improvement in physical supply. G7 countries have agreed to release 100 million barrels of crude and diesel from emergency reserves, while Gulf exports have recovered from their wartime disruption. According to Vortexa, crude oil and condensate flows in September recovered to 91% of pre-war levels at 16.3 million barrels per day.
Refined fuel exports from the Middle East, however, stand at only 60% of pre-March levels. Kpler estimates the share of petroleum product shipments through the Strait of Hormuz has fallen to 11% of total volume, down from 20% at the start of the year, largely because of refinery closures in Saudi Arabia, Kuwait and the UAE.
WTI falls further, losing twice what Brent has
WTI crude has been falling for a fourth consecutive week, down around 15% from its peak — twice the decline seen in Brent over the same stretch. Brent's relative resilience stems from fears of further supply disruption alongside pent-up demand in Eurasia, where buyers had delayed purchases during months of conflict before shifting back into the market by October.
Lower crude oil prices also eased inflation-risk pressure elsewhere. German Bund yields fell and US Treasury yields eased from fresh multi-decade highs. The Dollar Index slipped back toward 101.8. That move still looks more like relief than a trend change, since US yields remain near multi-decade highs and expectations for further Fed tightening remain intact.
Sources: ActionForex, ActionForex
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