Oil retreats as Saudi Oman shipments ease fears
Arabian Post Staff -Dubai Oil prices fell on Wednesday after Saudi Arabia offered additional crude cargoes to Asian refiners through Oman, easing fears that Middle East disruptions would remove more barrels from the market. Brent crude settled $2.92, or 2.7 per cent, lower at $105.83 a barrel, while US West Texas Intermediate dropped $3.40, or 3.2 per cent, to $102.43. The decline followed a…
Oil prices retreated on Wednesday after Saudi Arabia pledged extra crude shipments via Oman to Asian refiners, quelling concerns over possible Middle East disruptions, according to the Arabian Post. Brent crude dropped $2.92, or 2.7%, to $105.83 per barrel, while US West Texas Intermediate fell $3.40, or 3.2%, to $102.43 per barrel.
The price plunge followed a rally sparked by worries over damage to Saudi export infrastructure and reduced tanker traffic through the Strait of Hormuz. Saudi Aramco initiated ship-to-ship transfers near Oman's Sohar port to maintain crude flows following attacks on the kingdom’s East-West pipeline to Yanbu. This pipeline, which bypasses Hormuz, has gained importance as strait traffic has plummeted amid the escalating regional conflict.
The additional Saudi supply through Oman offered traders some relief that alternative logistics could curb immediate losses, though the market remains wary of any further damage to pipelines, terminals, or shipping routes. Low vessel movements through Hormuz underscored the vulnerability of Gulf export flows despite Saudi's new arrangements.
US inventory data further pressured crude prices, with commercial crude stocks declining by 640,000 barrels last week – a smaller drop than anticipated. Gasoline and distillate inventories increased, signaling improved domestic product supplies, but diesel prices remained near record highs in Europe and the US. The shortage has driven diesel and jet fuel refining margins to record levels, despite crude price declines.
US retail diesel prices have surged to record levels, inflating costs for various industries and raising inflation concerns. European buyers remain exposed due to heavy dependence on imported diesel and jet fuel. Russia has extended diesel export restrictions through October, and Gulf shipping uncertainties have intensified competition among refiners and traders for available cargoes.
The divergence between crude and diesel prices highlights the uneven impact of the supply shock, as extra Saudi crude helps alleviate concerns over feedstock availability but does not immediately replace lost refining capacity or restore disrupted fuel flows. Saudi export flexibility is being tested by security risks beyond Hormuz, with attacks on Saudi infrastructure and threats near Bab al-Mandeb narrowing dependable alternatives.
Aramco has delayed or canceled some deliveries to European customers since the pipeline disruption, increasing demand for Atlantic Basin grades. European refiners have sought alternatives, including North Sea crude, while Asian buyers have received additional Saudi volumes through Oman. Oil markets are now also considering a stronger dollar and higher borrowing costs following the US Federal Reserve's rate hike.
A firmer dollar could make commodities priced in US currency pricier for non-US buyers, adding pressure to crude during periods when supply fears subside. Even after Wednesday's fall, prices remain well above pre-escalation levels, and traders continue to price crude with a significant risk premium due to ongoing vulnerabilities in major export routes, production infrastructure, and refining systems.
Written by urgent.news from Arabian Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
