Crude futures retreated in after-hours trading on Thursday after reports that Saudi Arabia is rerouting crude exports through Oman amid expectations that its East-West pipeline could return to service eased fears of a prolonged supply disruption.
Front-month West Texas Intermediate futures fell 1.31% to $101.09 per barrel, while Brent futures retreated 1.83% to $103.89/bbl.
Gelber & Associates strategists said October WTI trades at $100.78/bbl, down 1.6%, as Saudi Arabia offers additional Asian cargoes through ship-to-ship transfers via Oman, reducing the immediate risk that pipeline damage will strand exports.
The US Energy Information Administration said in its weekly report commercial crude oil inventories decreased by 600,000 barrels to 423.4 million barrels in the week ended Sept. 11.
Crude inventories are 1% above the five-year average, the EIA said. The draw contrasted with a 7.1 million-barrel American Petroleum Institute build reported for the same period.
On the supply front, the growing tightness in diesel markets, including in the US, China and Russia, has raised speculation about possible US export controls on crude oil and refined products.
Average US retail price for regular gasoline rose 16 cents over the past week to $4.43 per gallon, the American Automobile Association said in a Thursday note, as elevated crude prices and continued volatility around the Strait of Hormuz pushed fuel costs higher.
Tom Kloza, chief energy adviser at Gulf Oil, said that diesel prices surged to a record $6.39 per gallon on Thursday, surpassing the previous high set in June 2022.
The combined price of a gallon of diesel and a gallon of gasoline also climbed to a record $10.83, exceeding the previous June 2022 peak of $10.80, Kloza said. US gasoline prices stood at $4.44 per gallon.
Saudi Arabia is reportedly seeking to restore about half the capacity of its East-West pipeline within days following drone attacks that damaged pumping stations last week.
The Gulf state has also offered additional crude cargoes to Asian refiners through ship-to-ship transfers off Oman's Sohar port, according to media reports, providing an alternative route for barrels affected by the disruption.
Soojin Kim, research analyst at MUFG, said that a faster restoration of Saudi pipeline capacity could ease physical-market pressures, though constrained Hormuz flows and continued Russian supply disruption will keep crude prices elevated.
On Wednesday, Secretary Wright said 18 million barrels of crude and refined products moved through the Strait of Hormuz on Tuesday with US assistance, during a Fox News interview. The US Department of Energy confirmed the remarks in an emailed response to.
Meanwhile, the US sanctioned an Iranian cryptocurrency exchange controlled by sanctioned Iranian financier Babak Zanjani on Thursday, accusing it of processing payments for ships to transit safely through the Strait of Hormuz.
The US Treasury Department said the bank routed hundreds of millions of dollars to the Islamic Revolutionary Guard Corps and used it to transfer funds paid to Iran's newly established Hormuz Safe Marine Services Authority.
The US military has also continued efforts to control maritime traffic around Iran. The US Central Command said in a post on X on Thursday that it had redirected 104 commercial vessels to ensure compliance with Washington's blockade, as of Sept. 17.