Saudi Supply Outlook Boosts Oil Prices as Middle East Tensions Rise
Oil prices dropped for a third consecutive day on Friday as easing concerns over Saudi supply disruptions outweighed anxiety about escalating tensions in the Middle East. Brent crude futures fell by $0.79, or 0.75%, to $104 per barrel, while US West Texas Intermediate futures declined by $0.70, or 0.69%, to $101.20 per barrel.
The decline comes despite fresh fighting between Saudi Arabia and Yemen's Iran-backed Houthis, which has expanded the Middle East conflict. However, markets seem to be shrugging off these concerns as reports suggest that Saudi Arabia is seeking to restore about half of its East-West pipeline capacity within days.
Phillip Nova's head of market insights, Priyanka Sachdeva, noted that recent efforts to restore Saudi export capacity have reduced immediate supply anxiety. However, analysts emphasized that oil prices will remain above $100 per barrel until there is clear evidence of a sustained improvement in Hormuz traffic and supply normalization.
The Strait of Hormuz remains a risky transportation route for oil, with Iran's Revolutionary Guards Navy reporting that a Togo-flagged tanker was struck while attempting to make an 'illegal passage' through the strait on Thursday.