Oil prices fell Thursday after Saudi Arabia proposed a naval coalition to protect ships from attack in the Red Sea and Strait of Hormuz. The move follows a midweek rally driven by renewed U.S.-Iran strikes, and traders are now watching Sunday's OPEC+ meeting for the next signal on supply.
Oil prices fell Thursday after Saudi Arabia proposed a naval coalition to protect key trade routes as ships come under attack from Iran and its allies. Brent crude futures lost nearly 2% to close at $89.03 a barrel, while U.S. West Texas Intermediate fell about 1% to settle at $83.59 per barrel, both easing after a sharp midweek rally.
Saudi Arabia proposes a maritime shield
The Saudi Defense Ministry said more than 40 countries attended a meeting to discuss what it called "strengthening maritime defense cooperation and unifying efforts to protect the security of maritime passages," according to a statement translated from Arabic. The push for a coalition follows Iran's Houthi allies in Yemen declaring a maritime embargo of Saudi Arabia last week, while Iran has repeatedly attacked ships transiting the Strait of Hormuz. Saudi Arabia had already rerouted some crude flows through its East-West pipeline to the Red Sea, but the Houthis are now challenging that route too.
Hormuz traffic picks up despite fresh strikes
Even as the U.S. and Iran traded strikes Thursday, shipping through Hormuz recovered. Kpler, a market intelligence firm, said 14 commodity vessels transited the waterway in both directions Wednesday, up from single digits the week before. That flow offset Brent's nearly 8% jump Wednesday, when the U.S. carried out a large wave of strikes against Iran in retaliation for missile attacks on American forces in the region.
Iran's Islamic Revolutionary Guard Corps has threatened further escalation in response.
Other flashpoints keep supply on edge
Egypt said two ships were hit by a drone attack at the Port of Damietta, a Mediterranean liquefied natural gas hub, and nobody has claimed responsibility. Separately, two attacks were reported on ships loading at the Caspian Pipeline Consortium terminal on Russia's Black Sea coast, the main export route for Kazakh barrels; similar attacks last week led to days without shipments and helped push oil above $100 a barrel. Traders are also looking ahead to Sunday's OPEC+ meeting, where the group is expected to announce a supply increase of 188,000 barrels per day for September.
Russia's extended diesel export ban, meanwhile, sent heating oil futures up as much as 3.7% Thursday, even as crude itself slipped.
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