Crude oil prices edged lower early Thursday as signs that oil cargoes were continuing to move through the Bab el-Mandeb Strait helped ease immediate concerns over global supply, despite renewed military exchanges between the United States and Iran and fresh attacks on energy infrastructure in the Middle East.
- +Oil prices ease as Red Sea tanker traffic calms supply fears
Brent crude fell by 1 percent to $89.46 per barrel, while US benchmark West Texas Intermediate (WTI) declined to $83.54 per barrel, as traders shifted focus from escalating geopolitical tensions to evidence that crude exports from the region were still finding their way to global markets.
Brent crude fell by 1 percent to $89.46 per barrel, while US benchmark West Texas Intermediate (WTI) declined to $83.54 per barrel, as traders shifted focus from escalating geopolitical tensions to evidence that crude exports from the region were still finding their way to global markets.
The decline followed reports that 39 commodity carriers exited the Bab el-Mandeb Strait on Tuesday, suggesting that despite heightened security risks, shipping through one of the world’s key oil chokepoints has not ground to a halt. However, tanker movements through the Strait of Hormuz remain significantly below normal levels.
The price retreat came even as the conflict between Washington and Tehran intensified.
The US Central Command (CENTCOM) announced another round of strikes on Iranian targets on Wednesday, describing the attacks as “a powerful response to yesterday’s attempted Iranian attacks on US forces based in the Middle East.”
Iran responded by launching missiles at US troops in Jordan, while US and Saudi forces reportedly struck Iran-aligned armed groups in Iraq that were allegedly preparing attacks on Saudi energy infrastructure.
The conflict also spilt over into Egypt, where authorities confirmed a drone strike on a US-owned tanker used for floating storage at the Damietta port, a major liquefied natural gas (LNG) export hub. Subsequent reports indicated that two LNG tankers were affected.
Despite the fresh attacks, oil traders appeared encouraged by continued crude shipments through alternative routes.
“While overall volumes are reduced, oil continues to leak out of the region through multiple channels, and additional workarounds are being explored. The longer this situation persists, the more these alternative routes and methods will erode Iran’s leverage over the Strait of Hormuz,” Tony Sycamore, an analyst at IG Group, said.
Analysts cautioned, however, that risks to global energy supplies remain elevated as hostilities increasingly threaten Saudi Arabia’s export infrastructure.
“Clearly, with Saudi oil infrastructure increasingly targeted, the risk of more prolonged supply disruptions grows,” ING commodity strategists said in a research note, adding that the impact is particularly acute in middle distillates, where refining margins remain at record highs.
The Bab el-Mandeb Strait has become increasingly important for Gulf oil exports as producers, particularly Saudi Arabia, divert more crude through the Red Sea to reduce reliance on the Strait of Hormuz. Any sustained disruption at either chokepoint could tighten global supplies and reignite upward pressure on crude prices.
For now, however, the continued movement of tankers through the Red Sea has tempered immediate supply concerns, prompting traders to unwind part of the geopolitical risk premium that had driven oil prices sharply higher in recent weeks.
