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Global oil prices fell about 1% for a third straight session on Friday, September 18, but remained above the USD 100-a-barrel mark. The decline came as hopes of alternative routes for Middle Eastern crude reaching global markets outweighed concerns over fresh strikes between Saudi Arabia and Yemen’s Iran-backed Houthis.
Brent crude futures fell USD 1.01, or 1%, to USD 103.77 a barrel by 0020 GMT, while US West Texas Intermediate futures declined USD 1.03, or 1%, to USD 100.88 a barrel. Both benchmarks had closed about 1% lower on Thursday.
Markets largely shrugged off fresh supply concerns after Saudi Arabia and the Houthis exchanged strikes across their border on Thursday, widening the Middle East war front.
Oil prices had climbed to around four-month highs earlier this week after crude loadings at Saudi Arabia’s Red Sea export hub of Yanbu were suspended. Riyadh also cancelled some deliveries to Europe following damage to its East-West pipeline in an attack last week. Three pumping stations along the pipeline were damaged, according to satellite imagery and industry sources.
A prolonged shutdown could cut off as much as 4% of global oil supply, according to traders, although estimates on how quickly the pipeline can be restored have varied.
Saudi Arabia is now seeking to restore about half of the pipeline’s capacity within days. It is also offering more crude cargoes to Asian refiners through ship-to-ship transfers off Oman’s Sohar port. The additional shipments could offset some of the disruption caused by the pipeline damage.
US Energy Secretary Chris Wright has also said crude should begin flowing through the pipeline within days. These efforts have eased some immediate supply concerns and helped pull oil prices lower despite continued geopolitical risks.
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On Thursday, Brent settled at USD 104.82 a barrel and WTI at USD 101.91 after both contracts fell sharply earlier in the session.
Meanwhile, Iran’s Revolutionary Guards Navy said a Togo-flagged oil tanker was struck while attempting an ‘illegal passage’ through the Strait of Hormuz, according to Iranian state media. The incident has added another layer of uncertainty to an already fragile oil market.
JPMorgan said on Thursday it had no 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 not held peace talks since an interim agreement reached in June collapsed within weeks.
The conflict is expected to feature in discussions at the UN General Assembly next week, with an Iranian delegation set to attend, according to the US State Department.
For now, markets are watching whether Saudi Arabia can restore disrupted flows and reroute enough crude to limit the impact of the pipeline damage.
