4 hrs ago
Oil Prices Fall as Supply Disruption Fears Ease
Oil prices went down by about 1% on Friday.
They still stayed above $100 for each barrel.
Traders felt less worried because Saudi Arabia may find other ways to send oil to customers.
Saudi Arabia’s pipeline was damaged in an attack last week.
The pipeline carries oil toward the Red Sea.
Some experts said the damage could reduce global oil supplies if repairs take a long time.
Saudi Arabia is trying to repair part of the pipeline and move oil using ships near Oman.
Fighting involving Saudi Arabia and Yemen’s Houthis continued, but it did not push prices higher.
Analysts said the future of oil supplies remains uncertain.
Brent crude fell 1% to $103.77 a barrel, while West Texas Intermediate dropped 1% to $100.88.
Both oil benchmarks extended losses into a third session but remained above $100 a barrel.
Markets focused on possible alternate routes for Saudi crude despite fresh Saudi-Houthi strikes.
Damage to Saudi Arabia’s East-West pipeline could eventually disrupt up to 4% of global oil supply.
Saudi Arabia is reportedly pursuing pipeline repairs and ship-to-ship transfers to offset supply disruptions.
- Who
- Oil traders, Saudi Arabia, Yemen’s Houthis, Iran, and energy analysts were involved in or affected by the developments.
- What
- Brent and West Texas Intermediate oil prices fell about 1% while remaining above $100 a barrel, as concerns about disrupted supplies eased.
- Where
- The developments involved Saudi Arabia’s East-West pipeline and Yanbu export hub, Oman’s Sohar port, and the Strait of Hormuz.
- When
- Friday, following losses on Thursday; the pipeline damage occurred the previous week.
- Why
- Hopes for alternate oil-shipping routes and repairs to the pipeline outweighed concerns about ongoing strikes and possible supply losses.
Supply Relief View
Supply Risk View
Impact of the pipeline disruption
Supply Relief View
Alternate shipping arrangements, ship-to-ship transfers near Oman, and expected repairs could restore or replace some disrupted flows, limiting the effect on oil prices.
Supply Risk View
The extent and duration of the damage remain uncertain, and a prolonged closure could cut off as much as 4% of global oil supply.
Effect of regional strikes
Supply Relief View
Markets largely shrugged off fresh Saudi-Houthi strikes because traders focused on possible ways for oil to continue reaching customers.
Supply Risk View
Continued strikes, including an incident involving a tanker near the Strait of Hormuz, show that supply risks remain and could worsen.
Key facts
- Brent price
- $103.77 a barrel after falling $1.01, or 1%.
- West Texas Intermediate price
- $100.88 a barrel after falling $1.03, or 1%.
- Price trend
- Both benchmarks extended losses into a third session.
- Potential supply impact
- A prolonged East-West pipeline closure could cut off as much as 4% of global oil supply, according to traders cited in the report.
- Pipeline damage
- Satellite imagery and three industry sources indicated that three pumping stations were damaged.
- Saudi response
- Saudi Arabia was reportedly seeking to restore about half the pipeline’s capacity within days and offering crude through ship-to-ship transfers near Oman.
- Additional tanker incident
- Iran’s Revolutionary Guards Navy said a Togo-flagged oil tanker was struck while attempting an alleged illegal passage through the Strait of Hormuz.
Sources
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