Key Takeaways
- Brent crude futures fell 1% to $103.77 a barrel.
- US West Texas Intermediate futures dropped 1% to $100.88 a barrel.
- Market concerns over supply disruptions were outweighed by hopes of alternate routes.
Oil prices fell by about 1% on Friday, extending losses for a third consecutive session, but remained above $100 per barrel. Brent crude futures dropped $1.01 to $103.77 a barrel, while US West Texas Intermediate futures fell $1.03 to $100.88 a barrel. Both benchmarks had closed down about 1% the previous day.
Despite concerns about potential supply disruptions, markets largely shrugged off these worries, with sources indicating that alternate routes for barrels from the Middle East to reach markets were seen as more promising. Saudi Arabia and Yemen’s Houthis exchanged fresh strikes across their border, expanding the Middle East war front, but this did not significantly impact oil prices.
This week, oil prices had climbed to around four-month highs as sources reported that crude loadings at Saudi Arabia’s Red Sea export hub of Yanbu had been suspended and Riyadh had cancelled some deliveries to Europe after its East-West pipeline was damaged in an attack last week. The closure of the pipeline could cut off as much as 4% of global oil supply, traders said.
Three of the pipeline’s pumping stations were damaged, according to satellite imagery and three industry sources. Saudi Arabia was seeking to return about half the capacity of its East-West oil pipeline within days after the critical link to the Red Sea was halted last week following drone attacks. The country was also offering more crude cargoes to Asian refiners through ship-to-ship transfers off Oman’s Sohar port, a move that would help offset some of the disruption caused by attacks on the East-West pipeline.
US Energy Secretary Chris Wright stated that crude should be flowing through the pipeline within days. However, JPMorgan said on Thursday it does not have a clear baseline view for oil markets for the first time since the start of the US-Israeli war on Iran. The US and Iran have held no peace talks since an interim agreement reached in June collapsed within weeks.
Iran’s Revolutionary Guards Navy reported that a Togo-flagged oil tanker was struck while attempting to make an “illegal passage” through the Strait of Hormuz, according to Iranian state media. This incident highlighted ongoing uncertainty in the region.
The war between the US and Iran will come up for discussion at the United Nations General Assembly next week, and an Iranian delegation will be able to attend, according to the US State Department. This development adds to the complexity of the situation and could influence oil market dynamics.
