Oil prices continued to fall on Thursday as concerns over possible supply disruptions eased following reports that Saudi Arabia was arranging alternative crude deliveries after attacks affected its key East-West pipeline.
Brent crude futures, the global oil benchmark, edged lower to $105.81 per barrel, while U.S. crude declined 0.22% to $102.14 per barrel.
Saudi Arabia is making additional crude cargoes available to Asian refiners through ship-to-ship transfers near Oman’s Sohar port. The arrangement is intended to reduce the impact on global supplies following attacks on the kingdom’s East-West pipeline, which carries oil toward the Red Sea.
U.S. Energy Secretary Chris Wright said on Tuesday that the disruption to the East-West pipeline was expected to be temporary. He described the outage as a brief interruption likely to last only a matter of days, helping ease market concerns over Saudi supply.
Earlier this week, crude-loading operations at Saudi Arabia’s Red Sea export terminal at Yanbu were suspended, while Riyadh also cancelled some shipments destined for European customers.
Yanbu has assumed greater importance for Saudi oil exports since Iran began blockading the Strait of Hormuz following U.S. and Israeli attacks on Iran in late February.
Peter Massabni, head of business development at XS.com, said Saudi Arabia’s attempts to establish alternative export routes following the disruption at Yanbu had provided some reassurance to oil markets. The measures raised expectations that at least part of the disrupted crude supply could return to the market.
Nevertheless, uncertainty surrounding the Middle East continues to weigh heavily on the outlook. Massabni cautioned that any renewed escalation causing more serious disruptions to regional oil and gas production or exports could sustain inflationary pressures and push bond yields higher.
Persistently elevated crude oil, gasoline and diesel prices could also affect expectations regarding the future course of U.S. Federal Reserve monetary policy, particularly if regional tensions intensify further.
