Global oil prices fell on Wednesday as concerns over Saudi Arabia’s oil supply eased after the kingdom proposed an alternative route to deliver additional crude to Asian refineries.
According to people familiar with the matter, cited by Reuters, Saudi Arabia has offered to transfer crude oil from ship to ship near Oman’s Sohar port for delivery to Asian refineries. The proposal has reduced fears of a major disruption to oil supplies from the Middle East.
Brent crude fell $2.92, or 2.7%, to $105.83 a barrel on Wednesday. U.S. West Texas Intermediate (WTI) crude declined $3.40 to $102.43 a barrel.
Saudi Arabia Seeks Alternative Supply Route
The proposal comes after an attack on Saudi Arabia’s East-West Pipeline raised concerns about disruptions to the kingdom’s crude exports.
UBS analyst Giovanni Staunovo said reports that Saudi Arabia could continue exporting oil from the Gulf had reduced fears of a significant supply disruption.
Oil prices had risen by more than $3 on Tuesday after shipping sources reported that crude exports from Saudi Arabia’s Yanbu port had been halted. Riyadh had also canceled some oil cargoes destined for European buyers following the attack on the East-West Pipeline.
Shipping Through Strait of Hormuz Declines
Saudi Arabia’s Yanbu port has become an increasingly important oil-export hub amid the conflict involving Iran.
The Strait of Hormuz has traditionally been a critical route for global energy supplies, carrying roughly one-fifth of the world’s oil and liquefied natural gas shipments.
Preliminary shipping data released Wednesday showed that only four visible vessels passed through the Strait of Hormuz on Tuesday, down from seven the previous day and significantly below the 10-day average of 18 vessels.
U.S. Oil Inventories Also Weigh on Prices
U.S. inventory data also contributed to the decline in oil prices.
According to the U.S. Energy Information Administration (EIA), U.S. crude oil inventories fell by around 640,000 barrels last week. Analysts surveyed by Reuters had expected a decline of approximately 1.62 million barrels.
At the same time, U.S. gasoline and distillate inventories increased, with the rise in diesel inventories exceeding expectations.
Analyst John Kilduff said stable or rising inventories of refined fuels were putting downward pressure on crude prices.
Middle East Conflict Remains a Major Risk
Despite the decline, the situation in the Middle East remains a major source of uncertainty for global oil markets.
Saudi fighter jets have carried out strikes in Yemen, while Iran-backed Houthi fighters have launched drone and missile attacks targeting several Saudi cities. The Houthis have also claimed a fresh attack on Yanbu port.
Citigroup said continued tensions in the Middle East could affect both crude oil and refined fuel prices in the coming weeks.
The bank expects the Strait of Hormuz could reopen in the fourth quarter of 2026, supported by regional diplomatic efforts.
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