Saudi Overtures Ease Oil Price Fears Amid Middle East Tensions

Oil prices declined on Thursday as concerns about supply disruptions in the Middle East eased. Saudi Arabia has offered extra crude cargoes through Oman, which reduced fears of a shortage.

The Brent crude futures price dropped 19 cents to $105.64 per barrel, while US West Texas Intermediate futures fell by 33 cents to $102.10. The prices had risen earlier in the week due to reports that Saudi Arabia suspended shipments from its Red Sea port and canceled some deliveries to European customers.

However, analysts say that these flows through Oman only partly offset lost export barrels following drone attacks on the East-West pipeline. Saxo Bank analysts noted that the pick-up in flows through the Strait of Hormuz is 'only partly offsetting lost export barrels'.

The Middle East conflict continues to weigh on oil prices, with Saudi warplanes pounding Yemen and Houthi fighters launching drones and missiles at Saudi cities. DBS Bank's head of energy research, Suvro Sarkar, said that under a bear case scenario, prices could spike towards $120 per barrel before normalizing back to $100.