Oil Prices Extend Losses as Saudi Crude Supplies Ease Disruption Fears

By Adedapo Adesanya

Oil prices fell early on Thursday as reports that Saudi Arabia is offering additional crude cargoes through Oman eased concerns about supply disruptions in the Middle East.

Brent crude futures traded at $104.59 per barrel after losing $1.24 or 1.2 per cent, and US West Texas Intermediate (WTI) crude was sold at $101.29 per barrel after it shed $1.14 or 1.1 per cent.

Saudi Arabia is offering additional crude loadings to Asian refiners through ship-to-ship transfers off Oman’s Sohar port.

The move is expected to partly cushion the impact of attacks on Saudi Arabia’s East-West pipeline, which supplies crude to the kingdom’s Red Sea export hub at Yanbu.

Oil prices had climbed to about four-month highs earlier this week after crude loadings at Yanbu were suspended and Saudi Arabia cancelled some cargo deliveries to European customers following attacks on the pipeline.

Yanbu became Saudi Arabia’s main outlet for oil exports after Iran began blockading the Strait of Hormuz after the US and Israel attacked the country at the end of February.

Fears of shortages had previously mounted after Kpler reported that oil in storage at Yanbu port had fallen below 15 million barrels, from close to 21 million barrels in July. This would have covered only a few days of exports at current rates (3.5 million barrels daily).

Reuters reported that two pumping stations serving the pipeline were damaged in an attack last week, with the timeline for repairs still unclear.

Despite the latest decline, oil prices remained above $100 a barrel as concerns persisted over the wider Middle East conflict and its potential impact on global crude supplies.

The Strait of Hormuz, which previously carried about one-fifth of global oil supplies, has also been affected by the conflict, while fighting involving Saudi Arabia and Yemen’s Houthi forces has added to supply concerns.

Meanwhile, US crude inventories fell by about 640,000 barrels last week, according to new data from the U.S. Energy Information Administration (EIA) released on Wednesday.

The decrease brings commercial stockpiles to 423.4 million barrels, according to government data, which are now 1 per cent above the five-year average for this time of year.

The EIA’s data release follows figures by the American Petroleum Institute (API) that were released a day earlier, which reported that crude oil inventories had gained 7.14 million barrels in the period.