Brent Crude Slips 1.2 Percent on Eased Supply Fears
Brent crude fell 1.2 percent to $104.59 as Saudi Arabia offered alternative shipping routes via Oman, easing immediate supply concerns in the Gulf region.
Brent crude prices dropped 1.2 percent to $104.59 a barrel in early Thursday trading. US West Texas Intermediate crude declined 1.1 percent to $101.29 a barrel. Both benchmarks reversed part of the gains seen in previous sessions.
The decline followed news that Saudi Arabia offered Asian refineries additional crude shipments through Oman. This move addressed fears of supply disruptions following attacks on domestic infrastructure. Market participants responded by reducing risk premiums on global barrels.
Oman route eases shortage fears
Saudi Arabia proposed ship-to-ship transfers near Sohar port in Oman. This option allows Asian buyers to maintain supply chains despite regional instability. The initiative follows damage to two pumping stations along the East-West pipeline.
Earlier in the week, crude loadings at Yanbu port were halted. Riyadh also cancelled some shipments to European customers. These actions pushed oil prices to a four-month high before the latest developments.
Hiroyuki Kikukawa of Nissan Securities noted that supply tightness concerns eased slightly. He cited the Oman option as a key factor limiting further price increases. The move provides a logistical workaround for affected buyers.
Diplomatic outlook caps price rallies
Expectations of progress toward easing Middle East tensions also limited gains. A US-China summit is scheduled for next week. Traders anticipate potential diplomatic breakthroughs that could stabilize the region.
The Strait of Hormuz remains a critical chokepoint for global energy flows. Before recent conflicts, one-fifth of world oil passed through this waterway. Its closure has increased the strategic importance of alternative export routes like Yanbu and Oman.
US inventories miss analyst forecasts
The US Energy Information Administration reported a drop in crude oil inventories. US stocks fell by approximately 640,000 barrels last week. Analysts had expected a larger decline of around 1.62 million barrels.
This data suggests domestic demand remains resilient despite higher prices. The smaller-than-expected drawdown contrasts with the external supply disruptions. Global markets continue to weigh these domestic signals against geopolitical risks. According to GN auto markets/energy: crude oil prices, the interplay of inventory data and diplomatic news drives daily volatility.
