Oil Prices Slide as Saudi Arabia Eases Supply Fears

Oil prices dropped on Thursday, extending losses as reports of Saudi Arabia offering extra crude cargoes through Oman eased concerns about supply disruptions. Despite the decline, oil prices remained above $100 due to ongoing tensions in the Middle East.

Brent crude futures fell by 1.8% to $103.95 a barrel, while U.S. West Texas Intermediate futures dropped by 1.7% to $100.66 a barrel. Analysts pointed out that Saudi Arabia's offer of additional oil shipments via Oman only partially offset the supply loss caused by drone attacks on the East-West pipeline.

Saudi warplanes pounded Yemen and Houthi fighters launched drones and missiles at Saudi cities, intensifying worries about the Middle East conflict. According to DBS Bank, a base-case scenario assumes that the U.S.-Iran war will dial down in the fourth quarter, with Brent stabilizing between $85 and $95 per barrel.

However, under a bear-case scenario, prices could spike towards $120 per barrel before normalizing back to $100. Saxo Bank analysts noted that the pick-up in oil flows through the Strait of Hormuz only partly offsets lost export barrels following drone attacks on the East-West pipeline.