Oil prices fell in early trading on Thursday, extending losses from the previous session after reports that Saudi Arabia was offering additional crude shipments through Oman, easing concerns over potential supply disruptions in the Middle East.
By 0049 GMT, Brent crude futures had fallen $1.24, or 1.2%, to $104.59 a barrel, while US West Texas Intermediate (WTI) crude futures dropped $1.14, or 1.1%, to $101.29 a barrel. Both contracts fell by around $3 on Wednesday.
“Concerns about tight supplies have eased somewhat following reports that Saudi Arabia will ship crude through Oman,” said Hiroyuki Kikukawa, chief analyst at Nissan Securities Investment.
He added that expectations of progress toward easing tensions in the Middle East ahead of a US-China summit next week were also limiting price gains.
Sources familiar with the matter said Saudi Arabia was offering additional crude cargoes for delivery to Asian refineries through ship-to-ship transfers off the port of Sohar, Oman. The move is helping ease some pressure on global supplies caused by attacks on Saudi Arabia’s East-West oil pipeline.
Oil prices had risen to their highest level in nearly four months earlier this week after shipping industry sources said crude shipments from Saudi Arabia’s Yanbu port on the Red Sea had been suspended and Riyadh had canceled some deliveries to European customers following attacks on the pipeline supplying Yanbu with crude.
Yanbu became the main outlet for Saudi oil exports after Iran began closing the Strait of Hormuz following the launch of the US-Israeli war against Iran in late February. Before the war, roughly one-fifth of the world’s 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 an attack last week. The timeline for repairs remains unclear.
Despite Thursday’s decline in oil prices, concerns over a further escalation of the war in the Middle East remain.
Meanwhile, the US Energy Information Administration (EIA) said on Wednesday that US crude oil inventories fell by less than expected last week.
EIA data showed that US crude inventories declined by around 640,000 barrels, compared with a forecast for a 1.62 million-barrel decrease in a Reuters poll of energy market analysts.
Source: Reuters
