Oil Falls as Supply Fears Ease

According to Rigzone, international oil benchmarks fell for a third consecutive day as immediate supply anxieties regarding the Middle East began to subside. Global prices settled near $104 a barrel, marking a slight weekly loss, while West Texas Intermediate hovered around $100. The market decline reflects a cooling of the geopolitical risk premium that previously spiked after attacks on Saudi energy infrastructure.

Saudi Aramco is currently restoring the East-West pipeline, which serves as a critical alternative to the Strait of Hormuz. The company intends to resume partial operations within days and reach full capacity in six weeks. To maintain market stability, the kingdom is increasing crude shipments from locations outside the Persian Gulf, although some European refiners were informed they will not receive allocations next month.

Despite the price drop, physical markets remain strained with North Sea and Mediterranean crude differentials reaching record levels. Scott Shelton of TP ICAP Group Plc noted that while the initial "physical panic is over," market participants remain cautious. Regional tensions persist as UK Maritime Trade Operations recently reported a tanker being struck by a projectile while exiting the Strait of Hormuz.

Investors maintain a generally positive outlook on crude, with money managers increasing net-long positions to the highest levels since May. Traders are closely watching upcoming diplomatic engagements, including a meeting of Persian Gulf nations at the United Nations and potential discussions between U.S. and Chinese leadership regarding the regional conflict and its impact on energy flows.