Saudi Arabia's Oman Cargo Move Eases Middle East Supply Fears

Oil prices fell sharply on Thursday as concerns over supply disruptions in the Middle East eased following reports of Saudi Arabia offering extra crude cargoes through Oman.

Brent crude futures dropped $1.24, or 1.2%, to $104.59 a barrel by 0049 GMT, while U.S. West Texas Intermediate futures were down $1.14, or 1.1%, at $101.29.

Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment, said concerns over supply tightness eased slightly following news that Saudi Arabia would ship cargo via Oman, adding that expectations of progress toward easing tensions in the Middle East ahead of the U.S.-China summit next week are also capping price gains.

Saudi Arabia's decision to offer more loadings of crude oil to Asian refiners via ship-to-ship transfers off Oman's Sohar port is seen as a move to blunt some of the hit to global supply from attacks on the Saudi Arabia's East-West pipeline to the Red Sea, which was suspended earlier this week.

The suspension followed attacks on the East-West pipeline, which feeds the Saudi port of Yanbu, and two pumping stations serving the East-West pipeline were damaged in an attack last week, with a repair timeline unclear.