Saudi Exports via Oman Push Oil Prices Down 3.2%

Brent crude futures fell 2.7% to settle at $105.83 per barrel. US West Texas Intermediate futures dropped 3.2% to close at $102.43. The decline followed reports that Saudi Arabia is offering additional crude cargoes to Asian refiners. These shipments use ship-to-ship transfers off Oman’s Sohar port. This move eases fears of major supply disruptions in the Middle East.

US Energy Information Administration data showed a smaller-than-expected draw in crude inventories. Stocks fell by 640,000 barrels last week. Analysts had predicted a drop of 1.62 million barrels. Gasoline and distillate inventories rose instead. This data indicated that refined product stockpiles are holding steady while crude declines flatten out.

Supply Routes Shift Away From Red Sea

Saudi Arabia suspended crude loadings at its Red Sea export hub of Yanbu. This followed strikes on the East-West pipeline that feeds the port. Riyadh also cancelled some cargo deliveries to European customers. The country is now routing oil through the Gulf and Oman. This shift reduces the immediate impact of attacks on Red Sea infrastructure.

Yanbu became a primary outlet after Iran blockaded the Strait of Hormuz. The blockade followed US and Israeli attacks on Iran in late February. Hormuz typically handles one-fifth of global oil and LNG supply. Vessel passage through the strait dropped to four on Tuesday. This is well below the 10-day average of 18.

Geopolitical Tensions Keep Markets Volatile

Saudi warplanes struck targets in Yemen. Iran-backed Houthi fighters launched drones and missiles at Saudi cities. The Houthis claimed fresh strikes on Yanbu. Violence continues to escalate in the region. Market participants remain cautious despite the recent price drop.

Citi expects near-term escalation to support crude and fuel prices. The bank anticipates the Strait of Hormuz will reopen in the fourth quarter of 2026. Diplomatic efforts may drive this resolution. Diesel remains a top concern in global oil markets.

Diesel Prices Hit Record Highs

The Middle East is a key supplier of diesel and suitable crude grades. Ukrainian attacks on Russian refineries have further tightened the market. Russian refineries are another major diesel supplier. European gasoil futures settled at a record high on Tuesday. US diesel prices also reached new levels.

Analysts note that the inventory data did not change the bullish trading stance. Buying significant price pullbacks remains the preferred strategy. Attempts to pick a top in this bull market are considered risky. The market remains on tenterhooks as the geopolitical situation evolves.