Oil Prices Fall as Saudi Crude Flows Through Strait of Hormuz

Oil prices fell on Tuesday due to increasing flows of Saudi crude after the restart of the East-West pipeline and ship movements through the Strait of Hormuz. The Brent crude futures for the November contract settled at USD 99.25 a barrel, down USD 1.09, or 1.09%. The WTI October contract finished at USD 94.99 a barrel, down USD 1.19, or 1.24%.

Saudi Arabia has restarted operations at its East-West Pipeline and could resume exports from Yanbu port later on Tuesday, according to three sources briefed on the matter. Iran can reopen the Strait of Hormuz within seven days if the US eases military pressure and lifts its blockade on Iranian ports, a senior Iranian official told Reuters.

Phil Flynn, senior analyst at Price Futures Group, said that 'Saudi Arabia is acting, not waiting.' Flows through the Strait of Hormuz have been increasing in recent days, averaging about 2.9 million barrels a day over the last six days, up from roughly 700,000 barrels a day in August.

Before US-Israeli attacks on Iran began in late February, the Strait of Hormuz handled about one-fifth of global oil and liquefied natural gas supplies. Hamad Hussain, senior climate and commodities economist at Capital Economics, said that 'there may also be other obstacles, such as the issue of tolls and fees, to overcome before a lasting solution can be achieved.'

Ole Hansen, head of commodity strategy at Saxo Bank, said he does not see much further downside to oil prices until supplies increase through the Strait of Hormuz.