Global oil prices extended losses on Thursday as concerns over supply disruptions from Saudi Arabia eased. The market was reassured by reports that the kingdom is offering additional crude cargoes to Asian refiners through ship-to-ship transfers near Oman’s Sohar port.
Brent futures, the international benchmark, edged lower to $105.81 per barrel. U.S. crude slipped 0.22% to $102.14 a barrel.
Reuters, citing sources familiar with the matter, reported that the extra cargoes are intended to soften the impact on global supply from attacks on Saudi Arabia’s key East-West pipeline, which connects production to export routes via the Red Sea.
U.S. Energy Secretary Chris Wright told CNBC on Tuesday that the East-West pipeline outage was a “brief and temporary interruption” that “will be measured in days,” helping calm worries about supply.
Earlier this week, crude loadings at Saudi Arabia’s Red Sea export terminal at Yanbu were halted, and Riyadh canceled some shipments to European customers. Yanbu has become Saudi Arabia’s main oil export route since Iran began blockading the Strait of Hormuz after U.S. and Israeli attacks on the country in late February.
Peter Massabni, head of business development at XS.com, said in a note published late Wednesday that Saudi Arabia’s efforts to secure alternative export routes after the Yanbu disruption reassured markets that some lost crude supply could return.
At the same time, he warned that the outlook remains heavily dependent on developments in the Middle East. A renewed escalation that causes deeper disruptions to regional oil and gas production and exports would keep inflation risks elevated and add further upward pressure to bond yields.
According to Massabni, uncertainty over the path of escalation in the region, together with persistently high crude, gasoline and diesel prices, could deepen pessimism over the future course of U.S. Federal Reserve monetary policy.
