International oil prices continued to decline on Friday, September 18, falling by about 2%, marking the third consecutive trading day of losses. Market expectations that the impact of Saudi Arabia’s supply disruption is limited have become the main driving force behind the decline.
As of 08:06 Greenwich Mean Time, Brent crude oil futures fell by $2.14, a decrease of 2%, to $102.68 per barrel; U.S. West Texas Intermediate (WTI) crude oil futures also dropped by $1.83, or 1.8%, to $100.08 per barrel. Brent crude oil is on track to decline by about 2% this week, marking the first weekly drop in three weeks.
Earlier this week, the market rallied due to the temporary halt of oil loading operations in Yanbu, a Red Sea export hub in Saudi Arabia, and the cancellation of some deliveries to Europe following damage to the east-west oil pipeline last week, pushing oil prices to nearly four-month highs. However, subsequent reports indicate that Saudi Arabia is working to restore about half of the east-west pipeline’s oil capacity within a few days and is providing more crude to Asian refineries through ship-to-ship transfers off the coast of Oman’s Sohar port, easing concerns about supply shortages.
Phillip Nova, market director at Hui Li Nova, said that Saudi Arabia’s efforts to restore export capacity have alleviated some market concerns. “The key lies in whether physical cargo flows can return to normal and on schedule. If the shipping conditions in the Hormuz Strait continue to improve, some geopolitical premiums may further diminish.”
Despite new attacks between Saudi Arabia and Iran-backed Houthi rebels in Yemen at the border on Thursday, sparking an expansion of conflicts in the Middle East, the oil market’s reaction remained relatively subdued. Analysts point out that as the market still awaits clear signs of improved supply, oil prices remain above $100 per barrel.
Transportation risks through the Hormuz Strait are still present. Iranian state media reported on Friday morning that the Iranian Revolutionary Guard Navy claimed a Togolese-flagged oil tanker was attacked on Thursday while attempting to “illegally cross” the strait. Since the breakdown of the interim agreement in June this year, the United States and Iran have yet to restart formal peace talks.
(Compiled from reports by Reuters and other sources)