- Brent crude fell below $105 as Middle East supply disruptions eased slightly
- West Texas Intermediate traded near $101 after sharp declines in prior session
- Saudi Arabia aims to restore half of pipeline capacity within days, full in weeks
Brent crude extended its decline on Thursday, slipping below $105 a barrel as signs of easing supply disruptions in the Middle East reduced some of the risk premium built into oil prices. West Texas Intermediate crude also weakened, trading near $101 a barrel, after both benchmarks fell sharply in the previous session.
The latest move followed reports that Saudi Arabia is working to restore around half the capacity of its damaged East-West pipeline within days, with full operations targeted in about six weeks. The pipeline, which runs across Saudi Arabia to its Red Sea coast, is particularly important because it offers an alternative route for exports that avoids the Strait of Hormuz.
The pipeline was damaged in drone attacks last week, contributing to a sharp rally in crude. Saudi Arabia has also been increasing crude shipments through alternative routes, including ship-to-ship transfers near Oman's Sohar port, to partially offset the disruption.
Still, the pipeline is only expected to return partially within days, meaning the market remains exposed to further attacks and delays in restoring normal exports.
US Energy Secretary Chris Wright said flows through the waterway had reached 18 million barrels a day on one recent day, while the seven-day average was about 11 million barrels a day.
Oil's retreat also comes as financial markets digest the Federal Reserve's latest policy move. The Fed raised interest rates on Wednesday and signalled that further tightening could be possible as inflationary pressures remain elevated. Higher rates and Treasury yields can weigh on crude demand expectations while also supporting the US dollar, making dollar-denominated commodities more expensive for holders of other currencies.
Meanwhile, US lawmakers have given final approval to legislation that would give President Donald Trump new authority to impose tariffs on countries buying Russian petroleum products. Potential targets include major importers such as China and India, adding another geopolitical variable for global energy markets.
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