Shafaq News
Oil prices fell on Wednesday after reports that Saudi Arabia was offering additional crude cargoes through Oman eased some concerns about Middle East supply disruptions, while a smaller-than-expected draw in US crude inventories added further downward pressure.
Brent crude futures fell $2.92, or 2.7%, to settle at $105.83 a barrel. US West Texas Intermediate futures fell $3.40, or 3.2%, to close at $102.43.
Saudi Arabia is offering moreloadings of crude oilto Asian refiners via ship-to-ship transfers off Oman's Sohar port, people familiar with the matter said, blunting some of the hit to global supply from attacks on the country's East-West pipeline to the Red Sea.
"News around Saudi Arabia exporting from the Gulf suggests concerns that the disruption could be larger are easing," said UBS analyst Giovanni Staunovo.
Oil prices had gained more than $3 in the previous session after shipping industry sources said crude loadings at Saudi Arabia's Red Sea export hub of Yanbu had been suspended and Riyadh had cancelled some cargo deliveriesto European customers. The suspension followed strikes on the East-West pipeline, which feeds the Saudi port of Yanbu.
Yanbu became Saudi Arabia's main outlet for oil exports after Iran began blockading the Strait of Hormuz after US and Israeli attacks on the country at the end of February. Prior to the war, Hormuz was the conduit for one-fifth of the world's oil and liquefied natural gas supply.
Visible vessel passage through the Strait of Hormuzremained in the single digitsat four on Tuesday, down from seven a day earlier, preliminary shipping data showed on Wednesday. That was well below the 10-day average of 18.
Oil prices came under further pressure after the US Energy Information Administration on Wednesday reported a smaller-than-expected draw from US crude inventories last week. Crude oil stocks in the top-producing nation fell about 640,000 barrels last week, the EIA data showed, compared to expectations of a 1.62 million barrel draw according to a Reuters poll of energy analysts.
US gasoline and distillate inventories rose last week, EIA data showed. The rise in diesel inventories was bigger than expected, while gasoline stockpiles were expected to have declined last week, according to the Reuters poll.
The data was bearish for oil prices as it showed refined product stockpiles are maintaining themselves and even rising slightly while crude oil declines are flatlining, said John Kilduff, a partner at Again Capital.
Other analysts warned the data has done little to change a market that remains on tenterhooks as violence continues to escalate in the Middle East.
"All in all, today's data did little to sway us away from a long-standing bullish trading stance where buying significant price pullbacks remains much preferable to any attempts to pick a top to this bull market," oil trading advisor Ritterbusch and Associates told clients in a note.
Tensions ratcheted higher in the Middle East as Saudi warplanes pounded Yemen and Iran-backed Houthi fighters launched drones and missiles at Saudi cities. The Houthis, who have swept through Yemeni towns along the Red Sea since last week, said they had launched fresh strikes on Yanbu.
Citi expects near-term escalation in the Middle East to continue supporting crude oil and refined fuel prices before the Strait of Hormuz eventually reopens in the fourth quarter of 2026 with support from regional diplomatic efforts, the bank said in a note.
Diesel has become the top concern in global oil markets as tensions escalated in recent weeks, as the Middle East is a top supplier of both the fuel and the types of crude oil grades best suited for its production. Ukrainian attacks on refineries in Russia, another major diesel supplier, have further tightened the market and sent prices to record highs.
European gasoil futures, a benchmark for diesel prices, settled at a record high on Tuesday. US ultra-low sulfur diesel futures also settled at a record high on Tuesday.
"Europe has lost substantial diesel and jet fuel supply from the Middle East, while ongoing tensions in Eastern Europe have disrupted output at several major Russian refineries and prompted Moscow to restrict fuel exports," said Frank Walbaum, market analyst at Naga.com.
The Russian government has decided toextend restrictionson diesel exports for fuel producers until the end of October, Vedomosti daily reported late on Tuesday, citing two unidentified sources.
"I would expect, unless there is a peace deal or an improvement in the situation in Russia, that diesel prices stay supported," said Staunovo at UBS.
(Reuters)
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