Oil Prices Drop Amid Supply Outlook Assessments and Middle East Developments - Sarmad

Oil prices fell by more than a dollar in early trading on Thursday, as investors assessed risks to supplies posed by attacks on ships transiting the Strait of Hormuz and US efforts to reduce oil shipping costs by easing sanctions on vessels.

By 0116 GMT, Brent crude futures dropped $1.39, or 1.31 percent, to $104.67 a barrel, while US West Texas Intermediate crude futures fell $1.02, or 1.07 percent, to $94.07 a barrel, wiping out gains from the previous session.

US crude prices rose to their highest level in three weeks during yesterday’s session after the Houthis attacked a Saudi Aramco facility, and Iran announced it was implementing new methods to target ships in the Strait of Hormuz and keep oil prices elevated.

Maritime transport officials said on Wednesday that a container ship and a dry bulk cargo vessel sank near the strait within the past 24 hours after being hit by projectiles in two separate incidents.

Attacks at the strait have escalated over the past ten days, with Iran stating it is intensifying its strikes in response to the US blockade of its ports and stricter sanctions imposed last month.

A US official said on Wednesday that the Trump administration is considering easing sanctions on what is known as the “shadow fleet,” which transports oil and petroleum products from countries such as Russia, Iran, and Venezuela, to help alleviate price pressures. The war with Iran has disrupted navigation and driven shipping costs to record highs.

The US official said the new discussions focus on the possibility of allowing the flow of “legitimate oil” on board ships that were previously subject to sanctions.

Increased production from Russia and the Middle East has helped curb price surges. The International Energy Agency said on Wednesday that Russia’s crude oil production rose by 65,000 barrels per day in September to reach 8.43 million barrels per day, though it remained 870,000 barrels per day lower than the same period last year.

The agency also stated that Gulf oil exports rose by 4.4 million barrels per day in September to approximately 75 percent of pre-war levels.

In the United States, crude oil and distillate inventories fell, while gasoline inventories rose last week, according to market sources on Wednesday citing data from the American Petroleum Institute.

Sources said crude oil inventories dropped by 11.1 million barrels in the week ending October 9.

Official data from the US Energy Information Administration is scheduled for release at 1600 GMT, after being delayed by one day due to the Columbus Day holiday on Monday.