Oil prices fell 2% as concerns over supply disruptions from Saudi Arabia eased
Brent crude is heading for a weekly decline for the first time in three weeks. On Friday, oil prices dropped 2%, marking a third consecutive session of losses. While worries about the escalation of Middle East conflicts persist, concerns regarding supply disruptions originating from Saudi Arabia are subsiding.
Prices remain above $100 per barrel as markets await concrete signs regarding oil flows.
As of 06:36 GMT, Brent crude futures fell $2.30 (or 2.2%) to $102.53 per barrel, while WTI crude futures dropped $1.85 (or 1.8%) to $100.04 per barrel.
With this 2% drop, Brent crude prices are on track to record their first weekly loss in three weeks.
On Thursday, Saudi Arabia and the Houthis exchanged new attacks along the border; however, despite the widening war front in the Middle East, markets are largely dismissing concerns about new threats to supply.
Earlier in the week, prices had approached four-month highs following reports that crude oil loadings at Saudi Arabia's Red Sea export hub, Yanbu, were suspended, after the East-West pipeline was damaged in an attack last week, and that Riyadh had cancelled some shipments destined for Europe.
However, prices eased following reports that Saudi Arabia was attempting to restore about half of the capacity of its East-West oil pipeline within a few days, and that Oman was offering more crude oil cargoes to Asian refineries via ship-to-ship transfers off the port of Sohar.
There are varying estimates regarding how long it will take for the pipeline to reopen and for crude oil flows to return to normal.
Oil prices remained above $100 per barrel as markets awaited concrete signs of a clear improvement in supply. The key factor is whether the flow of physical shipments will return to normal and how long that process will take.
The geopolitical risk premium could decrease further as the market considers when a lasting improvement in traffic through the Strait of Hormuz might be achieved; transporting oil through the region remains risky.
According to Iranian state media reports early Friday, the Iranian Revolutionary Guard Corps Navy announced that a Togo-flagged oil tanker was struck on Thursday while attempting an "illegal passage" through the Strait of Hormuz.
No peace talks have taken place between the US and Iran since the interim agreement reached in June collapsed within weeks.
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