Saudi Arabia Boosts Crude Supplies via Oman as Oil Holds Above $100
Oil prices ended around 1 per cent lower on Thursday but remained above $100 a barrel as markets assessed the impact of Saudi Arabia-Houthi strikes against signs that additional Saudi crude supplies could reach international markets and ease concerns over shortages.
Saudi Arabia and Iran-backed Houthi forces in Yemen exchanged new attacks across their border on Thursday. The widening of the Middle East conflict into Yemen and Saudi Arabia has raised concerns that the global energy supply squeeze triggered after US and Israeli strikes on Iran in February could intensify.
Brent crude futures settled $1.01, or 0.95 per cent, lower at $104.82 a barrel, while US West Texas Intermediate (WTI) crude declined 52 cents, or 0.5 per cent, to $101.91. Both benchmarks had dropped roughly 3 per cent in the previous session.
Brent prices had earlier fallen by more than $3 to their lowest level since September 10, while WTI also dropped by over $3 to its lowest since September 11. The declines followed reports that Saudi Arabia was offering additional crude cargoes to Asian refiners through ship-to-ship transfers near Oman’s Sohar port, helping to counter some of the disruption caused by attacks on the East-West pipeline leading to the Red Sea.
Saudi Arabia was also working to restore around half of the East-West oil pipeline’s capacity within days, after drone attacks forced the route to shut down last week, Bloomberg reported.
Saudi oil supply
Oil prices had risen to around four-month highs earlier this week after shipping sources reported that crude loadings at Yanbu, Saudi Arabia’s Red Sea export hub, had been suspended and that Riyadh had cancelled some deliveries to European buyers. Yanbu is supplied by the East-West pipeline.
Market participants said an extended shutdown of the pipeline could disrupt as much as 4 per cent of global oil supplies. Saudi Arabia has yet to provide a firm timeline for restoring operations, although Wright told CNBC on Tuesday that crude flows through the pipeline were expected to resume within days.
Three pumping stations linked to the East-West pipeline were damaged during last week’s attack, with the expected repair timeframe still uncertain, according to assessments from three oil and security sources.
“Oil prices extended the previous session’s losses on Thursday as concerns over Middle East supply disruptions eased to some extent,” said Christopher Tahir, senior market strategist at trading platform Exness. He pointed to higher crude volumes being moved through additional offshore loadings via Oman and efforts to bring the East-West pipeline back online.
Diesel market under pressure
“Nevertheless, the physical market remains tight, limiting the scope for further declines. Tanker traffic through the Strait of Hormuz continues to fall, while tensions between Saudi Arabia and the Houthis leave Red Sea shipping and regional energy infrastructure exposed to renewed disruption,” Tahir added.
Singapore-based DBS Bank said its base-case outlook for the fourth quarter assumes tensions between the US and Iran will moderate, allowing Brent crude prices to stabilize between $85 and $95 a barrel.
While disruptions to crude supplies remain the primary concern for oil markets, tightening diesel availability has emerged as an additional pressure point. Damage to energy infrastructure across the Middle East and Russia has further constrained fuel supplies.
European gasoil futures, a key benchmark for diesel pricing, settled at a record high on Tuesday. US ultra-low sulfur diesel futures also ended at a record level.
A Ukrainian drone strike damaged a refinery in Yaroslavl, Russia, sparking a fire that was later brought under control, regional Governor Mikhail Yevrayev said on Thursday.