Oil prices fall for 3rd day as supply concerns ease, diplomacy in focus

Oil prices slipped by one percent on Friday, continuing their three-day decline but remained above $100 a barrel, buoyed by hopes of alternative routes for Middle Eastern crude to market, according to Reuters. Brent crude futures dropped $1.01, or one percent, to $103.77 a barrel, while US West Texas Intermediate futures slipped $1.03, or one percent, to $100.88 a barrel. Both indexes had tumbled about one percent on Thursday.

Despite fresh threats to oil supplies, markets largely ignored the escalating conflict between Saudi Arabia and Yemen's Houthi rebels. On Thursday, both sides exchanged additional strikes along their border, further escalating the Middle Eastern war. Oil prices had risen to multi-month highs earlier in the week as reports suggested Saudi Arabia's Red Sea export hub of Yanbu had suspended crude loadings and Riyadh had canceled some deliveries to Europe after an attack on its East-West pipeline.

The pipeline's reopening timeline remains uncertain, with estimates from Reuters sources varying. Three of the pipeline's pumping stations, one more than previously estimated, were damaged. If the pipeline stays shut, it could cut off up to four percent of global oil supply. Saudi Arabia is reportedly aiming to restore half the pipeline's capacity to Yanbu within days following the Red Sea link's shutdown due to drone attacks.

As a potential remedy, Saudi Arabia is offering additional crude shipments to Asian refiners via ship-to-ship transfers off Oman's Sohar port. This move could help mitigate some of the supply disruptions caused by the pipeline attacks. US Energy Secretary Chris Wright stated that the pipeline should resume flow within days.

Adding to the market uncertainty, JPMorgan announced on Thursday that it lacks a definitive baseline view for oil markets for the first time since the US-Israeli war on Iran began. The US and Iran have not held peace talks since an interim agreement reached in June fell apart within weeks. The conflict will be addressed at the United Nations General Assembly next week, where an Iranian delegation will be allowed to participate.