Oil Market Falls as Saudi-Led Red Sea Security Plan Calms Markets

By Adedapo Adesanya

The oil market settled lower by 1 per cent on Thursday as traders digested proposed plans for a Saudi Arabia-led maritime coalition to boost defence cooperation around the Red Sea.

Brent futures slipped by $1.71 or 1.88 per cent to $89.03 a barrel, while the US West Texas Intermediate (WTI) crude futures declined by 87 cents or 1.03 per cent to trade at $83.59 per barrel.

Saudi Arabia seeks to lead a coalition to ‌boost defence cooperation in the Bab El-Mandeb Strait, the Red Sea and the Gulf of Aden.

The Saudi defence ministry said 14 states, including Turkey, Pakistan, Egypt, Sudan and Djibouti, have issued a joint statement in support of the proposed multinational maritime defence coalition.

This comes after Iran-aligned Houthi ​militants in Yemen declared a naval blockade last week on Saudi Arabia, threatening the Red Sea route for its oil exports, an alternative ⁠to the largely blockaded Strait of Hormuz. The strait, which normally handles around a fifth of global oil and liquefied natural gas flows, ​has remained a focal point for oil markets since the US and Israel launched the war on Iran on February 28.

Houthis had attacked Saudi Arabia ​this week from Iraqi territory in coordination with Iraqi armed groups, reflecting growing ​coordination among Iran-aligned militias, ⁠two officials in the region said. The attacks included strikes on oil facilities in Saudi Arabia’s eastern province, the kingdom’s main crude hub.

Iran and Oman also continued talks on the management of the Strait of Hormuz, after Iran previously ruled out Oman’s proposal for regional joint management of the waterway.

It also denied that it is negotiating with US officials and gave no sign that it was ready to make new concessions over its effective closure of the strait.

Meanwhile, the US military said it had hit dozens of Islamic Revolutionary Guard Corps (IRGC) targets in Iran in an operation launched after it fired ballistic missiles at U.S. forces in the Middle East.

Fresh supply worries also emerged after tankers loading at the Caspian Pipeline Consortium (CPC) terminal headed away from the Black Sea after a vessel was hit during loading at the terminal on Thursday.

A Ukrainian drone ⁠attack caused a ​fire at Lukoil’s Perm refinery that damaged and forced the shutdown of one of its crude distillation units.