Oil extends slump as Saudi Arabia moves to restore key pipeline
It is the biggest drop in more than six weeks.
Oil prices continued their downward trend on Tuesday, extending the biggest drop in over six weeks as signs emerged that key Middle East supply disruptions were easing. West Texas Intermediate crude fell toward $102 a barrel, down 3.2% from the previous day, marking its lowest level since August 4. Meanwhile, Brent crude closed below $106.
Saudi Arabia is working to restore about half the capacity of its damaged East-West pipeline within days, with full operations expected to resume in around six weeks, according to a well-informed source. US Energy Secretary Chris Wright stated that 18 million barrels of crude and products passed through the Strait of Hormuz on Wednesday. The seven-day average of flows through the strategic waterway, which links the Persian Gulf to global markets, was 11 million barrels a day.
Crude oil prices have surged by roughly three-quarters this year, driven by a US-Iran war curbing Middle East supplies and the ongoing Russia-Ukraine conflict. The recent attack on the East-West pipeline, which transports oil from Saudi Arabia to its Red Sea coast, has highlighted its importance as a critical alternative to the contested Strait of Hormuz.
The pipeline's restoration is seen as a significant step in restoring Middle East oil flows, potentially alleviating some of the supply pressures that have fueled global inflation.
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