Oil Prices Ease as Saudi Crude Shipments Via Oman Reduce Supply Concerns

Oil prices edged lower in Asian trading on Thursday after reports that Saudi Arabia was offering additional crude cargoes through Oman eased some concerns about disruptions to global supplies. Prices remained above $100 a barrel, however, as investors continued to assess the risk of the Middle East conflict spreading further.

Brent crude futures fell 19 cents, or 0.2%, to $105.64 a barrel by 6:47 a.m. Saudi time. US West Texas Intermediate futures declined 33 cents, or 0.3%, to $102.10. Both benchmarks dropped by about $3 on Wednesday.

Saudi Arabia is offering additional crude cargoes to Asian refiners through ship-to-ship transfers off Oman’s Sohar port, according to people familiar with the matter. The shipments are expected to partially offset supply losses linked to attacks on Saudi Arabia’s East-West pipeline, which transports crude to the Red Sea port of Yanbu.

Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, said concerns about tight supplies had eased slightly following reports of the Saudi shipments through Oman.

He also said expectations of progress toward reducing tensions in the Middle East ahead of a planned US-China summit next week were limiting further gains in oil prices.

Despite the additional cargoes, analysts said the shipments were unlikely to fully replace the crude affected by the disruption at Yanbu.

Saxo Bank analysts said increased flows through the Strait of Hormuz were only partly compensating for lost Saudi export volumes following drone attacks that disrupted the East-West pipeline.

Oil prices had climbed to around four-month highs earlier this week after shipping industry sources reported that crude loadings at Yanbu had been suspended. Saudi Arabia also cancelled some oil deliveries to European customers, according to traders.

The disruption followed attacks on the East-West pipeline, which has become an important route for transporting Saudi crude to the Red Sea.

Yanbu has taken on greater importance as a Saudi oil export outlet following the disruption to shipping through the Strait of Hormuz. Before the conflict, the strategic waterway was used to transport about one-fifth of global oil supplies.

The attacks and subsequent supply concerns have increased uncertainty across energy markets, particularly for refiners and oil-importing countries in Asia and Europe.

The latest Saudi cargoes through Oman have provided some relief to the market, but traders remain focused on developments around the Middle East and the ability of major producers to maintain export flows.

With both Brent and WTI still above $100 a barrel, market participants are also watching for further disruptions, changes in shipping routes and diplomatic developments that could affect the balance between global oil supply and demand.