Key Points
- Brent falls about 0.9 per cent to $102.13 a barrel.
- West Texas Intermediate drops 0.7 per cent to $91.56.
- Prices had jumped nearly 4 per cent on Wednesday.
ISLAMABAD: Oil prices retreated on Thursday after rising nearly 4 per cent in the previous session, as renewed diplomatic signals from Iran reduced some of the premium in prices from persistent Middle East supply risks.
Brent crude futures fell 94 cents, or 0.9 per cent, to $102.13 a barrel, while US West Texas Intermediate crude declined 59 cents, or 0.7 per cent, to $91.56.
Brent had settled $3.83, or 3.86 per cent, higher at $103.08 on Wednesday, while West Texas Intermediate gained 1.81 per cent to $92.16.
The sharp rebound followed several sessions of declines driven by expectations of increased Middle East oil supplies. Brent fell below $100 earlier on Wednesday during the early trading session after Iran signalled that it could reopen the Strait of Hormuz if US military pressure and restrictions on Iranian ports were eased.
The Strait remains central to the market because it is a major route for oil shipments from the Gulf. Shipping through the waterway has remained well below normal levels since the Iran war began in February, leaving traders highly sensitive to any development affecting regional exports.
Saudi Arabia has, meanwhile, restarted its East-West oil pipeline, which provides an alternative route for moving crude from the kingdom’s eastern oilfields to the Red Sea port of Yanbu without using Hormuz. The pipeline resumed at reduced rates after drone attacks damaged pumping infrastructure and disrupted Yanbu exports.
The restart initially pushed Brent below $100 on Tuesday, with the benchmark falling to about $97.7 as traders anticipated improved regional supplies. The pipeline has a capacity of about 7 million barrels per day, and had been handling roughly 4 million barrels per day during the disruption, according to market reports.
The market then reversed course after Iranian President Masoud Pezeshkian told the United Nations General Assembly that Tehran would not surrender to US pressure. Iran has continued reviewing proposals on lifting the naval blockade and reopening Hormuz, but Washington and Tehran remain divided over terms of the settlement.
The latest price movement therefore reflects two competing forces: the prospect of recovering Saudi supplies and a diplomatic reopening of Hormuz on one side, and the continuing risk of renewed disruption to Gulf oil flows on the other.
READ ALSO: Oil Prices Fall Below $100 As Saudi Arabia Restores Flows Through Key Pipeline
Oil prices have consequently remained highly volatile, with Brent moving from below $100 earlier this week to above $103 on Wednesday before retreating on Thursday.
East-West oil pipeline
Saudi Arabia’s restart of its East-West oil pipeline is also easing supply concerns. The pipeline can move crude to the Red Sea, allowing Saudi Arabia to bypass the Strait of Hormuz. Operations have resumed at reduced capacity following damage from a drone attack.
The competing supply and geopolitical risks have kept oil prices highly volatile, with Brent moving between below $100 and above $103 a barrel in recent sessions.
