Brent crude slips below $100, drops for third consecutive day as supply disruption fears ease

Global equity markets are trading in the green across the board as crude oil prices ease for the third consecutive day. In Asia, Japanese and Hong Kong markets closed in the green, with gains of up to 1.2% after a sustained downtick in oil prices cheered investor sentiment.

Brent crude oil prices fell below $99 per barrel on Tuesday, sliding over 4%, while WTI crude oil prices fell below $90 per barrel this week. The diplomatic standoff continues between the US and Iran over control of the Strait of Hormuz. However, easing supply disruptions in the region cooled investor anxiety over crude oil prices.

Besides this, the resumption of the East-West pipeline through Saudi Arabia turned out to be the major catalyst for the recent drop in oil prices. Saudi Arabia’s Energy Minister said that the oil flows through the pipeline reached 5.8 million barrels per day.

In addition, reports also indicated that crude oil exports from the Middle East exceeded pre-war levels for the four days of the last week of September, alleviating major fears of supply disruptions and price rises.

Meanwhile, G7 countries also pledged to release 100 million barrels of diesel and crude from the emergency reserve and pledged to refrain from imposing any export restrictions. The apex body for crude oil exporting countries, OPEC+ (Oil & Petroleum Exporting Countries), also pledged to keep production unchanged till November, providing adequate supply in the market.

Brent crude futures trade at a discount

According to oilprice.com, the crude oil futures for January 2027 trade at $96 per barrel, followed by a further discount in the February contract at $94 per barrel. The steep discount to the current-month contract indicates that oil traders expect normalcy at the start of 2027. It also prompts oil exporters to sell out the inventory at current prices, reducing inventory costs and selling it at a lower price later. Meaning, if the geopolitical situation in the Middle East cools off further, a large supply block will hit the markets, adding more pressure on crude oil prices.

Disclaimer: This article is written purely for informational purposes and should not be considered investment advice from Upstox. Please consult a financial advisor before making any investment decisions.