Brent crude and US crude both fell about 2% on Friday, a third straight session of losses, as easing fears over Saudi Arabia's supply disruptions outweighed worries about a widening Middle East conflict. Brent is on track for its first weekly loss in three.
Brent crude futures fell $2.3, or 2.2%, to $102.53 a barrel by 0636 GMT on Friday, while US West Texas Intermediate futures dropped $1.85, or 1.8%, to $100.04 a barrel. The declines mark a third straight session lower even as Saudi Arabia and Yemen's Iran-backed Houthis exchanged fresh strikes across their border on Thursday, widening the Middle East war front.
Saudi pipeline repairs ease supply fears
Markets largely shrugged off the new cross-border strikes. Earlier this week, prices climbed to near four-month highs after crude loadings at Saudi Arabia's Red Sea export hub of Yanbu were suspended and Riyadh cancelled some deliveries to Europe following an attack on its East-West pipeline last week.
However, prices cooled on reports that Saudi Arabia was seeking to restore about half the pipeline's capacity within days and was offering more cargoes to Asian refiners through ship-to-ship transfers off Oman's port of Sohar. According to Reuters: "Recent efforts to restore Saudi export capacity have reduced some of the immediate supply anxiety." That assessment came from Priyanka Sachdeva, head of market insights at Phillip Nova.
Strait of Hormuz risk persists
Transporting crude oil through the region remains risky, however. Iran's Revolutionary Guards Navy said a Togo-flagged oil tanker was struck on Thursday while attempting an "illegal passage" through the Strait of Hormuz, according to Iranian state media. Oil prices remain above $100 a barrel as markets wait for clearer evidence of a supply recovery.
UN talks loom amid stalled diplomacy
The US and Iran have held no peace talks since an interim agreement reached in June collapsed within weeks, adding to the geopolitical risk hanging over the region. The war will come up for discussion at the United Nations General Assembly next week, where an Iranian delegation will be able to attend, according to the US State Department.
Source: Commodities & Futures News
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