Oil continues to fall as fears of Middle East supply disruptions ease
Oil prices fell at the start of Thursday’s trading, continuing a decline from the previous session, following reports that Saudi Arabia is offering additional shipments of crude oil via Oman, which eased concerns about supply disruptions in the Middle East.
By 00:49 GMT, Brent crude futures dropped $1.24, or 1.2 percent, to $104.59 per barrel, while U.S. West Texas Intermediate (WTI) crude futures fell $1.14, or 1.1 percent, to $101.29 per barrel. Both contracts had declined by approximately $3 on Wednesday.
Hiroyuki Kikukawa, senior analyst at Nisay Securities Investment, said, “Concerns about tight supply eased slightly following news that Saudi Arabia would export shipments via Oman.”
He added, “Price gains are also being tempered by expectations of progress toward easing tensions in the Middle East ahead of the U.S.-China summit next week.”
Sources familiar with the matter said Saudi Arabia is offering additional crude shipments to be sent to Asian refineries via ship-to-ship transfers off the port of Sohar in the Sultanate of Oman, alleviating some of the pressure on global supplies caused by attacks on Saudi Arabia’s East-West oil pipeline.
Oil prices had risen to their highest levels in nearly four months earlier in the week, after shipping sector sources reported the suspension of crude oil shipments from Saudi Arabia’s Yanbu port on the Red Sea and Riyadh’s cancellation of some delivery shipments to European customers, following attacks on the pipeline supplying Yanbu with oil.
Yanbu port became Saudi Arabia’s main outlet for oil exports after Iran began closing the Strait of Hormuz following the U.S. and Israel’s war against Iran in late February. Before the war, one-fifth of global oil supplies passed through the strait.
According to assessments by three sources in the oil and security sectors, two pumping stations serving the East-West pipeline were damaged in last week’s attack, and the timeline for their repair remains unclear.
Despite Thursday’s decline in oil prices, concerns about the escalation of war in the Middle East persist.
Saudi warplanes bombed Yemen, and the Houthis launched drones and missiles at Saudi cities, the Yemeni group allied with Iran announced on Wednesday, following a rapid advance that expanded Tehran’s influence in the Middle East conflict.
Meanwhile, the U.S. Energy Information Administration (EIA) reported on Wednesday that U.S. crude oil inventories fell less than expected last week.
EIA data showed that U.S. crude inventories dropped by approximately 640,000 barrels last week, compared with analyst expectations from a Reuters survey indicating a decline of 1.62 million barrels.
