Key Points
- Brent crude falls 1.41 per cent to $104.55 a barrel in early Thursday trading.
- US West Texas Intermediate (WTI) rate declines 1.07 per cent to $94.07.
- Houthi attacks and threats to shipping near the Strait of Hormuz keep the market in perplexity
ISLAMABAD: Oil prices fell by more than $1 a barrel on Thursday after rising in the previous session, as traders monitor persistent security risks in the Gulf against the prospect of improved supply and easing shipping pressures.
Brent crude futures fell $1.50, or 1.41 per cent, to $104.55 a barrel, while US West Texas Intermediate crude declined $1.02, or 1.07 per cent, to $94.07 in early trading.
Both benchmarks reversed gains recorded on Wednesday, when reports of attacks on Saudi Arabia and a commercial ship near the Strait of Hormuz heightened concerns over possible supply disruptions.
Gulf attacks keep supply concerns alive
The latest decline has not removed the risk premium associated with the Iran War. On Wednesday, Brent rose 0.35 per cent to settle at $106.06 a barrel.
WTI gained about 1 per cent to $95.09, after reports of a Houthi attack on Saudi Aramco facilities and fresh threats to commercial shipping near the Strait of Hormuz.
The waterway is a critical route for international oil trade. Renewed attacks on ships threaten to disrupt deliveries even when crude production increases elsewhere. It multiplies the risk, together with higher freight charges and war-risk insurance costs.
The uncertainty has made oil prices particularly sensitive to developments in the region.
Any escalation that restricts tanker movements could push prices higher, while signs of improved supply or reduced shipping risks could trigger further declines.
Supply gains have nevertheless helped limit price increases. The International Energy Agency (IEA) said global oil supply rose by 2.5 million barrels per day in September to 102.3 million barrels per day, driven largely by higher output from Gulf producers. However, the agency warned that renewed attacks in the region have made the recovery fragile.
Diesel markets face prolonged pressure
The pressure on refined fuels remains more severe than movements in crude prices alone suggest. The IEA has warned that global diesel markets could remain tight well into 2027 because of reduced exports from the Middle East and Russia, depleted inventories and high transport costs.
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Combined losses of diesel and other gasoil supplies from the two regions reached about 1.3 million barrels per day in September compared to year on year.
Global diesel exports fell 700,000 barrels per day year-on-year, while wholesale diesel prices in Europe and the United States hit a record around $220 a barrel last month.
The agency expects global oil demand to fall by an average of 2.6 million barrels per day in 2026, reflecting high fuel costs, restricted product availability and a weaker economic outlook. Diesel is expected to account for about a quarter of the projected decline.
For oil-importing countries, including Pakistan, volatile crude prices, expensive shipping, and tight diesel supplies continue to drive up fuel import bills, transport costs, and inflation.
Thursday’s decline offers some relief, but the outlook remains uncertain.
Further price movements will depend heavily on security in the Gulf, the reliability of tanker movements through the Strait of Hormuz and the pace at which disrupted supplies return to international markets.
Oil markets have remained volatile since the Iran war began on February 28, with threats to Gulf shipping, supply disruptions and higher transport costs keeping crude prices elevated.
