Oil prices moved lower on Friday following gains in the previous session, as investors assessed the risk of further escalation in the U.S.-Iran conflict alongside signs of recovering energy exports from parts of the Middle East.
As of 06:35 GMT, Brent crude futures for December delivery fell 0.7% to $101.61 per barrel, while West Texas Intermediate crude futures declined 0.8% to $92.17 per barrel.
The two benchmarks had risen by more than $4 and $2 per barrel, respectively, on Thursday.
The previous session’s gains followed a Wall Street Journal report that the U.S. was considering deploying another aircraft carrier group and additional troops to the Middle East. The report increased market attention on the potential implications of further military action for regional oil supplies.
The Strait of Hormuz remains a focus for energy markets because of its role as a major shipping route for global oil and gas supplies. Markets remain sensitive to potential disruptions affecting tanker traffic or energy infrastructure in the region.
Saudi Export Flows Recover After Disruptions
Saudi Arabia has restarted operations on its East-West Pipeline and resumed tanker loadings from the Red Sea port of Yanbu following earlier disruptions, according to the supplied information.
The resumption has contributed to a recovery in some regional export flows, providing an offset to concerns about potential supply disruptions elsewhere in the Middle East.
Further supply considerations emerged from reports that Chinese refiners have suspended fuel exports beyond Hong Kong and Macau during October.
The move could reduce supplies of refined products available to international markets, including diesel, jet fuel and petrol. Global diesel supplies have also been affected by reduced Russian exports and uncertainty over possible restrictions on U.S. fuel shipments.
The United States has reportedly asked European countries to consider releasing emergency diesel reserves as governments assess conditions in global fuel markets.
Energy Prices Remain in Focus for Inflation Outlook
Despite the recent increase in crude prices, signs of recovering Middle East supply and uncertainty surrounding global demand have been among the factors affecting oil markets.
Investors are also monitoring the potential implications of energy prices for inflation and monetary policy.
A sustained increase in crude prices could add to inflationary pressures, potentially influencing monetary policy decisions by central banks including the U.S. Federal Reserve. The extent of any impact would depend on the duration and scale of the increase in energy prices and other economic conditions.