Brent crude fell to $99.88 a barrel on Friday, as European governments considered releasing emergency fuel stocks to ease rising prices and concerns over diesel supplies.
The benchmark fell 2.37% from Thursday, although it remained 4.56% higher over the past month and 54.78% above its level a year ago, according to CFD data tracking Brent crude.
The decline came a day after Brent rose above $100, as traders weighed recovering Middle Eastern oil flows against continued uncertainty over the conflict and negotiations between the United States and Iran.
Europe considers releasing emergency stocks
European Union governments are discussing a French proposal to release additional diesel reserves as fuel prices rise and supplies remain under pressure.
Under the proposal discussed on Friday, European countries could release 50 million barrels of diesel, while members of the International Energy Agency could release another 50 million barrels of crude oil, according to a source familiar with the discussions cited by Reuters.
The discussions follow pressure from the United States for European countries to make more fuel available and help ease tight supplies.
The proposal also includes a possible U.S. commitment not to impose a unilateral ban on diesel exports, according to the Reuters report. G7 leaders were expected to discuss the issue further.
French President Emmanuel Macron also planned to hold a call with other G7 leaders on Friday to discuss measures to address rising crude and refined-product prices and supply concerns.
The focus on diesel is significant because the latest pressure in energy markets is increasingly linked to refined fuel supplies, rather than a shortage of crude alone.
Middle East oil flows continue to recover
More crude is also reaching international markets from the Middle East.
Oil flows through the region have moved closer to pre-war levels, while Saudi Arabia has restored part of the capacity of its East-West pipeline and resumed exports through the Red Sea port of Yanbu.
The recovery is increasing the amount of crude available to buyers after weeks of disruption.
However, the improvement in crude flows has not removed concerns about fuel supplies. Reuters reported that Middle Eastern diesel exports remain significantly below pre-war levels, while refinery disruptions in the region and Russia have reduced the availability of refined products.
This means that even as more crude returns to the market, shortages of products such as diesel can continue to put pressure on fuel prices.
Hormuz remains a supply risk
The outlook is also complicated by continued risks around the Strait of Hormuz, a major route for oil and gas shipments from the Middle East.
While more vessels are moving through the waterway, shipping remains difficult and costly. Reuters reported that LNG shipments through Hormuz increased in September to their highest monthly level since the conflict began, although the number of cargoes remained well below pre-war levels.
The continued movement of oil and gas through the strait has helped restore some supplies, but the security situation remains uncertain.
The United States has also reportedly increased its military presence in the region, while shipping companies continue to face risks from attacks on commercial vessels.
OPEC+ decision adds to supply outlook
The Organisation of the Petroleum Exporting Countries and its allies, known as OPEC+, are also due to meet this weekend to discuss production policy.
The group is expected to leave its November production targets unchanged, according to people familiar with the matter cited by Reuters.
That would keep the focus on actual oil flows from the Middle East, emergency stock releases and the ability of refineries to produce enough diesel and other fuels for consumers.
Brent remains well above last year’s level
Friday’s decline brings Brent back below $100, but the benchmark remains significantly higher than it was a year ago.
The latest movement reflects improving crude supplies alongside continuing pressure in refined fuel markets.
For now, European discussions over emergency stock releases, recovering Middle Eastern oil flows and the security of the Strait of Hormuz remain central to the outlook for crude and fuel prices.
