Oil Prices Steady After Middle East Shipments and Saudi Price Cut

Oil prices steadied after a decline on Monday, as increased shipments from the Persian Gulf and a price cut by Saudi Arabia suggested a looser market. Brent for December settlement rose 0.4% to $100.70 a barrel, while West Texas Intermediate (WTI) for November delivery added 0.4% to $89.75 a barrel. Gulf producers are moving larger volumes through the Strait of Hormuz, despite ongoing risks in the region. Kuwait is pumping oil at about 75% of pre-Iran war levels, and Iraq aims to hire more vessels to transport its cargoes.

Saudi Aramco reduced the price of its flagship Arab Light grade for Asian buyers to a six-year low, aiming to boost market share. Despite these adjustments, Brent remains 65% higher this year following disruptions caused by the US and Israel's attack on Iran in February. Product markets remain tight due to Ukrainian strikes on Russia, prompting the Group of Seven and partners to release additional stockpiles.

In Yemen, Saudi-backed forces seized the Red Sea city of Mocha from Iranian-backed Houthis, advancing toward the Bab el-Mandeb chokepoint, a crucial route for Saudi exports. Recent Houthi attacks have damaged energy infrastructure and tankers. Analysts note that while oil flows are recovering, price cuts and stockpile releases are pressuring crude prices. However, ongoing conflicts and supply concerns limit significant declines.

Naohiro Niimura, a partner at Market Risk Advisory Co., highlighted that supply concerns persist, making it difficult for the market to maintain short positions. Later on Tuesday, the US Energy Information Administration is set to release its Short-Term Energy Outlook, providing insights into diesel and heating-oil conditions during the Northern Hemisphere winter. President Donald Trump also eased restrictions on tax-exempt dyed diesel to lower costs ahead of midterm elections.