Oil Falls Again as Easing Saudi Supply Fears Offset Middle East Tensions

By Adedapo Adesanya

Oil was down for a third day on Thursday, as easing concerns over Saudi supply ‌disruptions outweighed worries about the Middle East conflict amid fresh fighting between Saudi Arabia and Yemen’s Houthis.

Brent crude futures declined by 79 cents or 0.75 per cent to $104 a barrel, while US West Texas Intermediate (WTI) crude futures shrank by 70 cents or 0.69 per cent to $101.20 a barrel.

Markets largely shrugged off concerns about new threats to supplies even as Saudi Arabia and Yemen’s Iran-backed Houthis exchanged fresh strikes across their border on Thursday, expanding the Middle East war front.

Earlier this week, prices climbed to close to four-month highs as sources said crude loadings at Saudi Arabia’s Red Sea export hub of Yanbu had been suspended.

Saudi Arabia had cancelled some deliveries to Europe after its East-West pipeline was damaged in an attack last week.

However, prices have cooled off on reports that Saudi Arabia was seeking to return about half the capacity of its East-West oil pipeline within days and the nation was offering more crude cargoes to Asian refiners through ship-to-ship transfers off Oman’s port of Sohar.

The spread of the ⁠war to Yemen and Saudi Arabia has raised new concerns about oil supplies by jeopardising the main alternative Red Sea route for Gulf exports while traffic through the Strait of Hormuz remains constrained.

US President Donald Trump also rebuffed pleas from the Saudis for military support to fight the Houthis, who agreed to a ceasefire with the United States last year after Washington bombed the group for two months.

The US President faces the prospect of political losses for his Republican Party in November’s midterm elections, partly because of higher energy prices since the United States and Israel attacked Iran in February.

President Trump said on Thursday he is approaching a critical juncture over whether to restart massive attacks on Iran.

The US and Iran have held no ⁠peace talks since an interim agreement reached in June collapsed within weeks. The war will come up for discussion at the United Nations General Assembly next week, and an Iranian delegation will be able to attend, according to the US State Department.

Iran’s Revolutionary Guards Navy said a Togo-flagged oil tanker was struck while attempting to make an “illegal passage” through the Strait of Hormuz.