Brent crude futures fell by more than 1% to around $104.74 a barrel in early trading, while US West Texas Intermediate declined to about $101.60. Both contracts had fallen sharply on Wednesday following reports that Saudi Arabia was offering additional crude cargoes through Oman.
The additional shipments provide an alternative route after attacks damaged pumping stations along Saudi Arabia's East-West Pipeline, which connects the country's major oil-producing regions with its Red Sea export facilities.
Saudi Arabia has suspended some loading activity at Yanbu while seeking to maintain exports through alternative arrangements. The move has helped reduce fears that the disruption would immediately remove larger volumes of crude from international markets.
US Energy Secretary Chris Wright has also indicated that the damaged Saudi pipeline could return to service more quickly than initially expected, providing another source of relief for traders.
Despite the decline in prices, supply risks remain significant. The conflict has disrupted shipping activity around important maritime routes, including the Strait of Hormuz and the Bab el-Mandeb Strait.
The disruptions have increased the cost of moving crude and refined products and have placed additional pressure on diesel markets. European fuel prices have risen sharply as refiners face uncertainty over Middle Eastern supplies.
For consumers and businesses, the consequences extend beyond the price of crude itself. Higher diesel and petrol costs can increase logistics, transport and manufacturing expenses, creating a potential secondary impact on consumer inflation.
The latest price movement nevertheless demonstrates the sensitivity of oil markets to changes in expected supply. Alternative Saudi export arrangements have reduced some immediate concerns, while the prospect of repairs to damaged infrastructure has also encouraged traders to scale back risk premiums.
Energy companies and governments are meanwhile assessing the resilience of infrastructure serving major production and shipping corridors.
The situation remains dependent on the duration and geographical spread of the conflict. A sustained disruption could continue to place pressure on fuel markets even if some crude exports are successfully rerouted.
For global energy markets, the latest decline in prices therefore represents a reduction in immediate supply anxiety rather than a complete resolution of the underlying infrastructure and geopolitical risks.
