BRENT crude futures fell $1.88, or 1.8 percent, to $103.95 a barrel Thursday morning, while U.S. West Texas Intermediate dropped $1.77, or 1.7 percent, to $100.66 a barrel. Both contracts had declined approximately $3 on Wednesday.
Saudi Arabia offered additional crude cargoes through ship-to-ship transfers off Oman's Sohar port, easing immediate supply disruption fears from Middle East turmoil. Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, said the news directly reduced supply-tightness concerns and noted that expectations for Middle East de-escalation before next week's U.S.-China summit are capping oil gains.
The increased flows through Oman only partially offset the global supply hit from attacks on Saudi Arabia's East-West pipeline to the Red Sea. Saxo Bank analysts cautioned that the additional exports via the Strait of Hormuz partly — but not fully — counter lost barrels following drone strikes that shut the East-West pipeline.
Oil prices had surged to four-month highs earlier this week after Saudi Arabia suspended crude loadings at its Red Sea export hub of Yanbu and canceled some cargo deliveries to European customers. The suspension followed attacks on the East-West pipeline; three oil and security sources confirmed two pumping stations serving the pipeline were damaged last week, with repair timelines still unclear.
Yanbu became Saudi Arabia's primary export outlet after Iran initiated a Strait of Hormuz blockade following U.S. and Israeli strikes on Iran in late February. The strait normally carries one-fifth of the world's oil supply.
Middle East tensions remained elevated Thursday. Saudi warplanes attacked Yemen, and Houthi fighters launched drones and missiles at Saudi cities Wednesday, with the Iran-backed movement confirming the action.
DBS Bank projects Brent will stabilize in the $85 to $95 range in the fourth quarter under a base-case scenario assuming de-escalation. Under a bear case, prices could spike toward $120 a barrel if attacks continue in the Strait of Hormuz and Red Sea.
