Oil Prices Plummet on Easing Saudi Supply Disruptions
Oil prices declined for a third consecutive session on September 18, driven by easing concerns over Saudi supply disruptions. Brent crude futures fell $1.65, or 1.6%, to $103.17 a barrel, while US West Texas Intermediate futures dropped 61 cents, or 0.6%, to $101.30.
The drop in prices comes despite ongoing tensions in the Middle East, with Saudi Arabia and Yemen's Iran-backed Houthis exchanging strikes across their border on September 17. However, analysts point out that immediate concerns over supply tightness have been eased by a combination of factors, including increased crude loadings via Oman, a build in oil product inventories in key regions, and higher fuel exports from China.
PVM Oil Associates analyst Tamas Varga noted that while profit-taking may continue, the current fundamental outlook does not justify a prolonged fall below $100 a barrel for Brent. The recent price surge had pushed benchmark prices to near four-month highs after sources said crude loadings at Saudi Arabia's Red Sea export hub of Yanbu were suspended and Riyadh cancelled some deliveries to Europe.
However, with reports that Saudi Arabia is seeking to restore about half the capacity of its East-West oil pipeline within days, and Chinese exports of refined oil products rising 12.7% year-on-year in August, prices have cooled down.