- Brent crude fell below $104, marking a third consecutive day of decline
- Saudi Arabia plans to restore half capacity of its East-West oil pipeline soon
- US President Trump considers a major decision on escalating attacks on Tehran
Brent crude slipped below $104 a barrel on Thursday, extending its decline for a third straight day as signs of easing supply disruptions in the Middle East and renewed focus on diplomacy between the US and Iran reduced some of the recent risk premium.
Brent had already fallen more than 3% over the previous two sessions, while West Texas Intermediate crude traded near $101 a barrel. The latest decline comes as traders assess whether disrupted Middle East supplies can gradually return to the market and whether diplomatic efforts could prevent a further escalation of the conflict.
A key development is Saudi Arabia's plan to restore its damaged East-West oil pipeline, which runs to the kingdom's Red Sea coast. Saudi Arabia is aiming to bring back roughly half of the pipeline's capacity within days, according to a person familiar with the matter. The route has become particularly important because it provides an alternative to shipments through the Strait of Hormuz, where some tanker traffic is still continuing despite security risks.
US President Donald Trump told Axios he was approaching a "big decision" on whether to re-escalate attacks on Tehran, while a meeting with Persian Gulf nations is planned next week in New York on the sidelines of the United Nations General Assembly.
China has also entered the diplomatic picture. Beijing privately asked Iran to help rein in Houthi militants after Saudi Arabia appealed to China, according to a Reuters report. The Iran-backed group has advanced in Yemen towards the Bab el-Mandeb chokepoint and has also attacked facilities in Saudi Arabia.
Despite the recent pullback, crude remains sharply higher this year. Brent is still more than 70% higher year-to-date, after the US-Iran conflict and the Russia-Ukraine war disrupted energy markets.
The outlook for flows through Hormuz remains uncertain. US Energy Secretary Chris Wright has estimated a recent seven-day average of 11 million barrels a day, while Clarksons Research has put the daily flow at around 8 million barrels.
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