Key Points
- Brent falls 79 cents to $104 a barrel
- WTI declines 70 cents to $101.20
- Saudi Arabia restoring part of damaged pipeline capacity corrects prices
- Fresh Houthi strikes keep supply risks elevated
ISLAMABAD: Oil prices fell for a third consecutive session on Friday. Easing concerns over Saudi Arabian supply disruptions outweigh renewed fears of a spreading Middle East conflict.
Persistent risk factors, however, kept both major crude benchmarks above $100 a barrel.
Brent crude futures fell 79 cents, or 0.75 per cent, to $104 a barrel by 0319 GMT, while US West Texas Intermediate (WTI) crude declined 70 cents, or 0.69 per cent, to $101.20 a barrel.
Both benchmarks had closed about 1 per cent lower on Thursday.
Brent is heading for a weekly decline of about 0.5 per cent. It would be its first weekly loss in three weeks, while WTI is still set to gain about 1.2 per cent for the week. High market volatility has also reduced the price gap between the two benchmarks.
The latest decline reflects growing expectations that Saudi Arabia can limit the impact of damage to its East-West oil pipeline. The pipeline carries crude from the Kingdom’s eastern oil fields to the Red Sea export terminal at Yanbu.
Saudi Arabia is working round the clock to restore about half of the pipeline’s capacity within days. According to international media reports, the Kingdom is also offering additional crude cargoes to Asian refiners through ship-to-ship transfers off Oman’s Sohar port.
These measures have reduced immediate concerns over a major loss of Saudi exports.
Vital oil pipeline
The 1,200-kilometre East-West Pipeline has been particularly important during the disruption of shipping through the Strait of Hormuz.
It has historically transported about 4 million to 5 million barrels of crude a day, roughly 4 per cent to 5 per cent of global oil supply.
Oil markets nevertheless remain highly sensitive to developments across the region.
During the escalating Middle East conflict, shipping through the Strait of Hormuz remained severely depressed.
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Preliminary tracking data showed only three commercial vessels transited the waterway on Wednesday, compared with 12 the previous day and a 10-day average of about 17.
The latest price decline follows an exceptionally volatile period for crude.
Brent briefly moved above $110 a barrel last week amid worsening supply concerns. Platts Dated Brent reached $114.26 on September 9, up sharply from $89.64 on August 28.
The moves reflected disruptions to Middle Eastern exports, reduced Hormuz traffic and heightened shipping risks.
The market is now focused on whether Saudi export flows can be restored and whether alternative routes can provide sustained supplies.
Until then, geopolitical developments around the Strait of Hormuz, Saudi infrastructure and regional shipping remain key drivers of crude prices.
Oil volatility
Oil prices have remained highly volatile since the Iran-US conflict. Traders are bound to react to changes in supply risks, shipping disruptions and diplomatic developments.
Brent moved from below $90 a barrel in late August to above $110 in early September before retreating towards $104.
The rapid swings have reflected uncertainty over the volume of crude reaching international markets, particularly through the Strait of Hormuz, which normally carries a substantial share of global seaborne oil shipments.
Damage to regional energy infrastructure, disruptions at export terminals, and efforts to redirect cargoes through alternative routes have influenced oil prices.
At the same time, concerns over economic growth and higher US crude inventories have periodically pressured prices lower.
The market has therefore been moving between fears of a major supply shortage and expectations that producers can maintain sufficient exports. This has kept daily price movements unusually sensitive to developments across the Middle East.
