Oil Prices React to Saudi-Yemen Conflict and ReRouting of Crude Shipments
Oil prices edged up on Thursday as traders balanced new fighting between Saudi Arabia and Yemen's Houthi rebels with reports that some Saudi barrels are still making their way to buyers.
West Texas Intermediate added $1.14 to $103.05 a barrel, while Brent eased by 18 cents to $104.64. For the week, U.S. crude is up about 3%, and Brent is roughly unchanged.
The recent clashes between Saudi Arabia and the Houthis have raised concerns that a broader Middle East conflict could further strain supplies that have been tight since the US and Israel struck Iran in February.
However, reports indicate that Saudi Arabia has identified alternative routes to deliver some crude to Asian customers via Oman, which has helped ease fears of a deeper shortfall.
Xs.com's Simon-Peter Massabni noted that the latest easing in crude prices reflects a waning geopolitical risk premium rather than a shift in underlying supply-demand fundamentals. He pointed out that better logistics for Saudi exports have lowered perceived supply-at-risk, and reminded that prices reflect both available barrels and the chance those flows get interrupted.
In the near term, Massabni expects prices to react more to geopolitical headlines than to classic balance indicators.