Oil prices extend losses as fears of Middle East supply disruptions ease

Oil prices continued to decline on Thursday, further extending the drop from the previous day, as rumors of Saudi Arabia supplying additional crude through Oman lessened worries about Middle East supply shortages. Brent crude futures slipped $1.24, or 1.2%, to $104.59 per barrel, while U.S. West Texas Intermediate futures fell $1.14, or 1.1%, to $101.29.

These decreases followed a $3 drop in both contracts on Wednesday. Hiroyuki Kikukawa, chief strategist at Nissan Securities, stated that fears of supply tightness eased after Saudi Arabia announced the ability to transport oil via ship-to-ship transfers off Oman's Sohar port. Reports also suggested that Middle East tensions easing ahead of the upcoming U.S.-China summit was helping to curb price increases.

Earlier in the week, oil prices had reached four-month highs due to reports that Saudi Arabia had halted shipments from its Red Sea port of Yanbu following attacks on its East-West pipeline, which redirected much of its oil exports after Iran blocked the Strait of Hormuz. The pipeline suffered damage last week, with repair timelines uncertain.

Despite the recent price decline, concerns over the escalating conflict in the Middle East persisted, as Saudi airstrikes targeted Yemen and Houthi rebels retaliated with drones and missiles. Meanwhile, the U.S. Energy Information Administration reported a smaller-than-anticipated drawdown in crude inventories last week, with U.S. stocks dropping about 640,000 barrels compared to the expected 1.62 million-barrel reduction.