Global oil prices extended their decline on Thursday as Saudi Arabia moved to redirect more crude exports through Oman, easing immediate concerns over supply disruptions following damage to its East-West pipeline.
As at the time of writing 7:20am (WAT), Brent crude was trading at $104.50 per barrel, down 1.21%, while West Texas Intermediate (WTI) stood at $101.20 per barrel, down 1.23%, according to Oilprice.com data.
The decline comes after oil prices surged earlier in the week, with Brent briefly crossing $108 per barrel and WTI rising above $103, as traders reacted to attacks on Saudi energy infrastructure and growing concerns over the security of crude exports.
The attacks disrupted the East-West pipeline, which transports Saudi crude to Yanbu, a major Red Sea export terminal. The disruption triggered concerns over potential supply shortages, particularly after reports that Saudi Aramco had cancelled several crude cargoes scheduled for European buyers this month.
Supply concerns were further heightened by falling inventories at Yanbu. According to Kpler data, crude stocks at the port had dropped below 15 million barrels, from nearly 21 million barrels in July, leaving only a few days of exports at the reported rate of about 3.5 million barrels per day.
Saudi Arabia’s decision to redirect more crude towards its Persian Gulf ports has, however, provided an alternative export route. Reports indicate that Saudi Aramco could use ship-to-ship transfers in the Gulf of Oman, allowing cargoes to avoid the disrupted pipeline route while maintaining access to international markets.
The move has helped calm some of the immediate supply concerns in the oil market. Similar ship-to-ship arrangements have been used by the United Arab Emirates, with ADNOC supplying crude through tenders covering locations in the Persian Gulf and the Fujairah-Sohar area outside the Strait of Hormuz.
Despite the price decline, the wider supply risk remains. Tanker traffic through the Strait of Hormuz remains in single digits, while recent attacks on vessels in the waterway continue to raise concerns over the movement of crude and petroleum products through one of the world’s most important oil shipping routes.
For Nigeria, the sustained strength in Brent remains important to crude export earnings and government revenue. However, at $104.50 per barrel, the benchmark was already lower than its weekly peak as Saudi Arabia’s alternative export arrangements reduced some of the immediate pressure on global supply.