Oil prices declined on Thursday as concerns over immediate supply disruptions eased after Saudi Arabia moved to maintain crude shipments through alternative export routes. However, prices remained above $100 a barrel as markets continued to monitor the wider security risks surrounding the Middle East conflict.
Brent crude futures fell $1.50, or about 1.4%, to $104.33 a barrel, while U.S. West Texas Intermediate crude dropped $1.09, or around 1.1%, to $101.34 a barrel at 1000 GMT. Both benchmarks had fallen by roughly $3 in the previous session.
The latest decline came after Saudi Arabia offered additional crude cargoes to Asian refiners through ship-to-ship transfers near Oman’s Sohar port. The move is expected to help compensate for some of the disruption caused by recent attacks affecting the kingdom’s East-West oil pipeline, which links Saudi production areas to the Red Sea.
Saudi Arabia has also suspended crude loading operations at Yanbu, one of its major Red Sea export hubs, following damage to infrastructure connected to the pipeline. The attacks have raised concerns about the ability of the kingdom to move oil through its normal western export route.
Market participants remain focused on how quickly the damaged pipeline infrastructure can be repaired. Two pumping stations serving the East-West pipeline were damaged in the recent attacks, and the exact timetable for repairs remains uncertain, according to oil and security sources.
The disruption has raised broader concerns because the pipeline plays an important role in Saudi Arabia’s ability to bypass the Strait of Hormuz when exporting crude. Some traders have estimated that a prolonged shutdown could affect a significant share of global oil supply.
U.S. Energy Secretary Chris Wright has indicated that Saudi Arabia’s East-West pipeline could return to service within days. Any rapid restoration would reduce pressure on global crude markets, although the continuing regional conflict means the risk of further disruptions remains.
The diesel market is facing additional pressure. European gasoil futures reached a record settlement earlier in the week, while U.S. ultra-low sulfur diesel futures also hit record levels. Refining disruptions in the Middle East and Russia have tightened supplies of refined fuels even as crude markets remain highly sensitive to geopolitical developments.
A Ukrainian drone attack also damaged a refinery in Russia’s Yaroslavl region on Thursday, according to the regional governor. The resulting fire was later extinguished. The incident added to concerns over Russian refining capacity and the availability of diesel supplies.
Analysts say the tightening diesel market could become a larger concern for energy consumers if disruptions persist. Refiners are increasingly prioritising diesel production, while gasoline markets face comparatively less pressure.
For now, oil markets remain caught between two opposing forces. Alternative Saudi export arrangements and expectations of a relatively quick pipeline repair are easing immediate supply fears, while continued military tensions in the Middle East and disruptions to refining infrastructure are keeping crude and fuel prices elevated.
Investors and energy traders are therefore watching Saudi Arabia’s pipeline repairs, alternative export flows through Oman, developments in the Middle East conflict and the condition of Russian refining capacity for further indications of where global oil prices may move next.
Saudi Arabia’s alternative supply eases pressure on oil market
