Oil Prices Ease on Saudi Arabia's Extra Crude Cargoes Amid Middle East Tensions

Oil prices eased on Thursday in Asian trade as reports emerged that Saudi Arabia was offering additional crude cargoes via Oman, reducing fears of supply disruptions. However, prices remained above $100 due to concerns over the Middle East conflict spreading.

Brent crude futures fell 19 cents or 0.2% to $105.64 a barrel by 0347 GMT, while U.S. West Texas intermediate futures were down 32 cents or 0.3% at $102.10. Both contracts dropped around $3 on Wednesday.

Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, noted that prices are being held back by expectations of progress in easing tensions between the U.S. and China ahead of their summit next week.

Some analysts expected these flows to only ease part of the supply losses from the Kingdom's Red Sea Port, limiting the decline in oil prices. Analysts at Saxo Bank said that the increase in flow through the Strait of Hormuz only partially offsets lost export barrels due to drone attacks which shut down Saudi Arabia's East West pipeline.

Singapore's DBS Bank believes that in its base case scenario for the fourth quarter, the U.S.-Iran war will be dialed down. Brent is expected to stabilize in the $85-$95 range under this scenario. However, if attacks and incidents continue in Hormuz and Red Sea, oil prices could rise to $120/bbl before normalizing towards $100/bbl.