Oil Prices Fall for Third Day as Saudi Supply Concerns Ease

Oil prices fell for a third straight session on Friday as easing concerns over Saudi Arabia’s supply disruptions outweighed fears of a wider Middle East conflict.

Brent crude futures fell $1.65 to $103.17 a barrel, while US West Texas Intermediate (WTI) crude declined 61 cents to $101.30 a barrel, according to Reuters. Brent remained on track for its first weekly decline in three weeks.

Both benchmarks had fallen about 1% on Thursday as traders assessed improving Saudi supply prospects alongside renewed fighting involving Saudi Arabia and Yemen’s Houthis.

Saudi Supply Recovery Eases Market Pressure

Oil prices had climbed sharply earlier this week after attacks damaged Saudi Arabia’s East-West oil pipeline.

The disruption forced Saudi Arabia to suspend crude loadings at the Red Sea export hub of Yanbu and cancel some deliveries to European customers. Those developments pushed crude prices toward four-month highs.

Market pressure eased after Saudi Arabia began increasing crude shipments through Oman. Trading sources also reported plans for additional Saudi crude exports from the Gulf through ship-to-ship transfers near Oman’s Sohar port.

Iran Reports Tanker Strike as Yemen Fighting Raises Red Sea Shipping Risks

The Saudi pipeline remains an important export route. The 1,200-kilometre East-West pipeline can carry roughly 4 million to 5 million barrels of oil per day toward the Red Sea.

Hormuz Traffic Remains a Concern

Despite the recent price decline, risks to oil transportation remain high.

Only four commodity vessels crossed the Strait of Hormuz on Thursday, well below the 10-day average of 16, according to preliminary Kpler data reported by Reuters.

The reduced traffic has kept attention on the security of the strategic waterway, which remains critical to global energy markets.

Iran’s Revolutionary Guards Navy also said it struck a Togo-flagged oil tanker while it attempted what Iranian state media described as an “illegal passage” through the strait.

The reported incident added to concerns over commercial shipping, although details surrounding the tanker remained subject to conflicting reports.

Saudi-Houthi Fighting Adds Uncertainty

Fresh fighting between Saudi Arabia and Yemen’s Iran-backed Houthis has also kept geopolitical risks elevated.

Saudi Arabia has carried out strikes in Yemen, while Houthi forces have launched attacks against Saudi targets. The escalation has added pressure to alternative energy routes through the Red Sea and Bab el-Mandeb.

Analysts continue to watch physical oil flows closely. A sustained recovery in Saudi exports and improved traffic through Hormuz could reduce some of the geopolitical premium currently built into crude prices.

However, further attacks on energy infrastructure or shipping could quickly reverse that trend.

Markets Watch Global Supply Flows

Saudi Arabia has taken steps to maintain exports despite disruptions at Yanbu. Trading sources told Reuters that Saudi Aramco plans to move about 60 million barrels of crude from its Gulf export terminal at Ras Tanura during September and October through transfers near Oman.

Japan’s refiners have also secured sufficient crude supplies through November, according to the Petroleum Association of Japan, providing some reassurance about near-term availability.

Investors will now focus on whether Saudi export flows continue to recover and whether shipping activity through the Strait of Hormuz improves.

The United States and Iran have not resumed peace talks since an interim agreement reached in June collapsed within weeks. The conflict is also expected to feature in discussions at the upcoming United Nations General Assembly.