Oil prices extend losses amid easing Mideast supply jitters

Oil prices continued to decline on Thursday as Saudi Arabia signaled a willingness to reduce supply constraints, despite ongoing tensions in the Middle East. Brent oil futures fell 2.9% to $102.74 a barrel, while West Texas Intermediate crude futures dropped 2.0% to $100.37 a barrel. The price rally for crude has been waning this week after reports emerged that Saudi Arabia was taking steps to address Red Sea supply disruptions caused by Houthi militants in Yemen.

The Houthis have made territorial gains along the western Yemen coast, potentially increasing their influence over the Bab el-Mandeb Strait, which Saudi Arabia uses for oil exports. Reports suggest that Riyadh is increasing crude deliveries to Asian refiners through ship-to-ship transfers off Oman's Sohar port, helping to maintain some supply flow despite the heightened military situation.

Additionally, Saudi Arabia is reportedly working to restart half of its east-west oil pipeline within days following Houthi attacks. Analysts at UBS reported that Saudi oil exports could increase in the near future. Meanwhile, the U.S. and Iran-backed Houthis met in Oman over the weekend, with the Houthis reiterating their commitment to a 2025 ceasefire and promising not to attack U.S. or Israeli vessels.

However, U.S.-Iran relations remain tense over the Strait of Hormuz, where shipping has dropped to a fraction of pre-war levels. Vessels passing through the key waterway numbered only three on Wednesday, down from 12 a day earlier, according to Kpler data cited by Reuters. In contrast, crossings of the Bab el-Mandeb Strait decreased to 21 from 24 on Tuesday.