Oil prices edged lower on Thursday as investors took profit following the previous session’s sharp rally, with crude shipments continuing to leave the Middle East despite the escalating conflict between the United States and Iran.
Brent crude futures fell US$1.29, or 1.42%, to US$89.45 a barrel, while US West Texas Intermediate (WTI) crude declined 56 cents, or 0.66%, to US$83.90 a barrel.
The pullback came after a strong surge on Wednesday, when Brent climbed 7.91% and WTI gained 6.56%, reversing losses from the previous session after concerns over supply disruptions intensified as the conflict widened.
Market sentiment improved after shipping data showed oil exports from the region had not come to a complete halt. Preliminary data indicated that 39 commodity vessels passed through the Bab el-Mandeb Strait into the Red Sea on Tuesday, the highest number since July 19, although traffic through the Strait of Hormuz remained limited.
IG market analyst Tony Sycamore said oil was continuing to leave the region through alternative routes despite lower overall shipping volumes.
“While overall volumes are reduced, oil continues to leak out of the region through multiple channels, and additional workarounds are being explored. The longer this situation persists, the more these alternative routes and methods will erode Iran’s leverage over the Strait of Hormuz,” he said.
The Strait of Hormuz, which previously handled around one-fifth of global oil and gas flows, has remained largely blocked since the US-Iran conflict began in February despite diplomatic efforts to restore safe passage.
Iran has rejected an Omani proposal for joint regional management of the strategic waterway, while tensions continued to rise elsewhere in the region.
On Wednesday, US and Saudi forces carried out strikes against Iran-backed paramilitary groups in Iraq after drone attacks targeting Saudi oil facilities launched from Iraqi territory. It marked Saudi Arabia’s first publicly acknowledged participation in joint military operations alongside the United States during the conflict.
Iran later said it had launched attacks on US bases in Jordan and struck three oil tankers transiting the Strait of Hormuz via what it described as an unauthorised route.
Meanwhile, Saudi Arabia is reportedly seeking to form a coalition to safeguard shipping in the Red Sea following threats from Yemen’s Iran-backed Houthi movement.
The Houthis announced earlier this month that they would impose a naval blockade on Saudi Arabia in the Red Sea, expanding attacks on commercial vessels and opening another front in the conflict by targeting traffic through the Bab el-Mandeb Strait, another key global oil shipping route.
Reuters
