Oil prices extended their losses on Thursday as Saudi Arabia’s plans to ship additional crude through Oman eased concerns over supply disruptions caused by the escalating Middle East conflict.
Brent crude futures fell US$1.24 or 1.2% to US$104.59 a barrel by 12.49am GMT, while US West Texas Intermediate (WTI) crude declined US$1.14 or 1.1% to US$101.29. Both benchmarks fell about US$3 on Wednesday.
Saudi Arabia is offering additional crude cargoes to Asian refiners through ship-to-ship transfers off Oman’s Sohar port, according to people familiar with the matter. The move could partly offset supply disruptions following attacks on the country’s East-West pipeline.
“Concerns over supply tightness eased slightly following news that Saudi Arabia would ship cargo via Oman,” said Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment.
“Expectations of progress toward easing tensions in the Middle East ahead of U.S.-China summit next week are also capping price gains,” he added.
Oil prices had climbed to around four-month highs earlier this week after crude loadings at Saudi Arabia’s Red Sea export hub of Yanbu were suspended and some cargoes to European customers were cancelled.
The disruptions followed attacks on the East-West pipeline, which supplies the Yanbu port. Two pumping stations were damaged last week and the timeline for repairs remains unclear, according to oil and security sources.
Yanbu has become Saudi Arabia’s main oil export outlet after Iran began blocking the Strait of Hormuz following US and Israeli attacks on Iran at the end of February. Before the conflict, the waterway carried about one-fifth of global oil supplies.
Despite Thursday’s decline, concerns over the wider conflict remain. Saudi warplanes struck Yemen while Iran-backed Houthi fighters launched drones and missiles at Saudi cities on Wednesday.
Meanwhile, US crude inventories fell by about 640,000 barrels last week, according to the US Energy Information Administration, smaller than the 1.62 million-barrel draw expected in a Reuters poll.
Reuters
