Oil prices fell by more than 1% in early trading on Thursday as investors assessed supply risks stemming from attacks on vessels in the Strait of Hormuz, alongside US efforts to reduce shipping costs by easing sanctions on some oil tankers.
By 0116 GMT, Brent crude futures had fallen $1.39, or 1.31%, to $104.67 a barrel, while US West Texas Intermediate crude dropped $1.02, or 1.07%, to $94.07 a barrel, erasing gains from the previous session.
US crude had reached a three-week high during Wednesday’s session following an attack targeting a Saudi Aramco facility and Iran’s announcement that it had adopted new methods to target vessels in the Strait of Hormuz.
Shipping industry officials said a container ship and a dry bulk carrier sank near the strait over the previous 24 hours after being hit by projectiles in two separate incidents.
Attacks in the strait have intensified over the past 10 days, while Iran said it was stepping up operations in response to the US blockade of its ports and tighter sanctions imposed last month.
Meanwhile, the administration of US President Donald Trump is considering easing sanctions on the so-called “shadow fleet,” which transports oil and petroleum products from countries including Russia, Iran and Venezuela, in an effort to ease price pressures and contain rising shipping costs.
A US official said discussions were focused on the possibility of allowing “legitimate oil” to be transported aboard vessels that had previously been subject to sanctions.
Higher production from Russia and the Middle East also helped limit the rise in oil prices. The International Energy Agency said Russia’s crude oil production increased by 65,000 barrels per day in September to 8.43 million barrels per day, although it remained 870,000 barrels per day below the level recorded during the same period last year.
The agency added that oil exports from Gulf countries rose by 4.4 million barrels per day in September, reaching around 75% of pre-war levels.
In the United States, preliminary data from the American Petroleum Institute, cited by market sources, showed declines in crude oil and distillate inventories and an increase in gasoline stocks last week. Crude inventories fell by 11.1 million barrels in the week ending October 9.
The US Energy Information Administration is scheduled to release official inventory data later on Thursday, after the report was delayed by one day due to the Columbus Day holiday.
Source: Reuters
