Oil prices fell on Wednesday as reports that Saudi Arabia was offering additional crude cargoes via Oman eased concerns about the scale of Middle East supply disruptions, while European diesel prices hovered near a record high.
Brent crude futures were down $1.69, or 1.55%, at $107.06 a barrel by 1128 GMT, while U.S. West Texas Intermediate futures were down $2.6, or 2.46%, at $103.23 a barrel.
In the previous session, oil prices settled more than $3 higher after shipping industry sources said crude loadings at Saudi Arabia’s Red Sea export hub of Yanbu had been suspended and Riyadh had cancelled some cargo deliveries to European customers, deepening concerns that disruptions to a critical export route could persist for weeks.
However, Saudi Arabia is offering more loadings of crude oil to Asian refiners via ship-to-ship transfer off Oman’s Sohar port after drone attacks damaged its oil pipeline to the Red Sea, people familiar with the matter said.
“News around Saudi Arabia exporting from the Gulf suggests concerns that the disruption could be larger are easing,” said UBS analyst Giovanni Staunovo.
Visible vessel transits through the Strait of Hormuz remained in the single digits at four on Tuesday, down from seven a day earlier, preliminary shipping data showed on Wednesday. That was well below the 10-day average of 18.
The waterway handled a fifth of the world’s oil and liquefied natural gas supply before the U.S.-Israeli war on Iran began in late February.
Macquarie analysts said flows of crude, condensate and refined products through the Strait of Hormuz had remained resilient despite escalating hostilities in the region and may have risen to more than 7.5 million barrels per day since fighting resumed on August 30.
They said the link between developments in the strait and oil flows had weakened.
Citi expects near-term escalation in the Middle East to continue supporting crude oil and refined fuel prices before the Strait of Hormuz eventually reopens in the fourth quarter of 2026 with support from regional diplomatic efforts, the bank said in a note.
DIESEL TIGHTNESS PERSISTS
European gasoil futures , a benchmark for diesel prices, rose to their highest intraday level since April on Tuesday before settling at a record high, underscoring tightness in fuel markets, although they also eased on Wednesday.
“Diesel’s strength reflects a product-specific shortage layered on top of expensive crude,” said Frank Walbaum, market analyst at Naga.com.
“Europe has lost substantial diesel and jet-fuel supply from the Middle East, while ongoing tensions in Eastern Europe have disrupted output at several major Russian refineries and prompted Moscow to restrict fuel exports.”
Last week, the U.S. national average price of diesel surpassed $6 a gallon for the first time ever.
The Russian government has decided to extend restrictions on diesel exports for fuel producers until the end of October, Vedomosti daily reported late on Tuesday, citing two unidentified sources.
“I would expect, unless there is a peace deal or an improvement in the situation in Russia, that diesel prices stay supported,” UBS’ Staunovo said.
U.S. INVENTORIES WEIGH
U.S. crude oil, gasoline and distillate inventories all rose last week, market sources said on Tuesday, citing data from the American Petroleum Institute.
Crude inventories rose by 7.1 million barrels in the week ended September 11, the sources said, citing API data. That compared with analysts’ expectations for a draw of about 1.6 million barrels, according to a Reuters poll.
REUTERS
