Oil Prices Drop as Saudi Arabia Shifts to Ship-to-Ship Transfers After Pipeline Attack

Global oil prices continued their downward trend on Thursday, bolstered by reports that Saudi Arabia is rerouting additional crude supplies through ship-to-ship transfers, thereby mitigating fears of severe export disruptions following an attack on the kingdom’s critical East-West pipeline.

Brent crude futures, the global benchmark, traded slightly lower at $105.81 per barrel, while U.S. West Texas Intermediate (WTI) crude dipped 0.22% to $102.14 a barrel.

The easing of supply anxieties stems from Saudi Arabia making extra crude cargoes available to Asian refiners near Oman’s Sohar port, according to a Reuters report citing sources familiar with the matter. This strategic pivot comes after Riyadh was forced to halt crude loadings at its Yanbu export terminal on the Red Sea earlier this week and cancel certain shipments to European customers.

Yanbu has emerged as Saudi Arabia’s primary oil export route since Iran imposed a blockade on the Strait of Hormuz in late February, following U.S. and Israeli military strikes on the country.

Peter Massabni, head of business development at XS.com, noted in a Wednesday analysis that these alternative export measures have reassured markets that some of the lost supply could be restored. However, he cautioned that market stability remains heavily contingent on geopolitical developments in the Middle East.

Massabni warned that a renewed escalation leading to deeper disruptions in regional oil and gas production would maintain elevated inflation risks and exert further upward pressure on bond yields. “This uncertainty regarding escalation paths in the region, along with crude, gasoline, and diesel prices staying at high and critical levels, could fuel pessimism about the US Federal Reserve monetary policy path,” he wrote.