Brent crude drops to $104.59 as Saudi Arabia routes oil shipments via Oman

Oil prices declined in early trading Thursday as Saudi Arabia arranged alternative crude shipments through Oman, according to Reuters. By 0049 GMT, Brent crude futures stood at $104.59 a barrel, down $1.24 or 1.2 percent, while US West Texas Intermediate crude futures traded at $101.29 a barrel, down $1.14 or 1.1 percent. Both contracts had declined by approximately $3 in the previous session on Wednesday.

Saudi Arabia arranges oil shipments through Oman port#

Sources familiar with the arrangements told Reuters that Saudi Arabia was making available additional crude cargoes to Asian refineries through ship-to-ship transfers at Sohar port in Oman. Hiroyuki Kikukawa, chief analyst at Nissan Securities Investment, stated that supply tightness concerns have diminished following the reports of Saudi shipments being routed through Oman. The alternative export route is addressing pressure on global supplies, Reuters reported.

Red Sea export suspension preceded price movements#

Prices had reached their highest point in nearly four months earlier in the week after shipping industry sources reported that crude exports from Yanbu port on Saudi Arabia's Red Sea coast had been halted, with some European customer deliveries canceled, according to Reuters. Yanbu has served as the primary export outlet for Saudi crude since Iran began restricting access to the Strait of Hormuz. Prior to that restriction, approximately one-fifth of global oil supplies transited through the strait.

US inventory data shows smaller than forecast decline#

The US Energy Information Administration reported Wednesday that US crude oil inventories decreased by around 640,000 barrels in the previous week, below the 1.62 million-barrel reduction forecast in a Reuters poll of energy market analysts. Kikukawa noted that anticipated progress on reducing Middle East tensions before a scheduled US-China summit next week was also constraining price increases. Despite Thursday's price declines, concerns about further escalation persist, Reuters reported.

Price trajectory follows midweek losses#

The Thursday decline extended losses from Wednesday's trading session, when both benchmark contracts fell by around $3. Brent crude futures dropped 1.2 percent from Wednesday's close, while WTI crude futures declined 1.1 percent over the same period. The price movements reflect changing assessments of supply availability in Asian and European markets following the alternative shipping arrangements through Oman.