Oil Prices fell by more than 1% on Thursday as investors assessed supply risks and Middle East tensions. Traders weighed attacks near the Strait of Hormuz against possible US measures to reduce shipping costs. Meanwhile, rising oil production and alternative shipping routes helped ease concerns about a deeper supply shortage. However, continued regional instability kept global energy markets on alert.
Brent crude futures dropped $1.76, or 1.7%, to $104.30 per barrel by 9:25 a.m. Saudi time. Meanwhile, US West Texas Intermediate crude fell $1.06, or 1.1%, to $94.03 per barrel. Both benchmarks reversed gains from the previous trading session. Their declines reflected investors’ cautious response to changing supply conditions.
WTI had reached a three-week high during the previous session. That increase followed an attack on Saudi Aramco’s headquarters by Yemen’s Iran-backed Houthi movement. Tehran also announced new tactics targeting vessels passing through the Strait of Hormuz. These developments heightened concerns about disruptions to a critical global oil shipping route.
Maritime security concerns intensified after two vessels sank near the strait within 24 hours. A container ship and a dry bulk carrier suffered projectile strikes in separate incidents. Consequently, shipping companies faced growing uncertainty across the waterway. Attacks have increased over the past ten days as the regional conflict escalated.
Iran has said it would intensify strikes in response to the US blockade of its ports. Washington also introduced tougher sanctions last month. These developments have disrupted maritime traffic and pushed freight costs to record levels. Therefore, traders continue monitoring security risks alongside production and inventory figures.
At the same time, the Trump administration is considering easing sanctions on certain oil-carrying vessels. The proposal aims to reduce shipping costs and support petroleum deliveries. Some of these vessels previously transported oil and petroleum products from Russia, Iran, and Venezuela. A US official said discussions focused on potentially allowing legal oil shipments aboard previously sanctioned vessels.
Nevertheless, higher production from Russia and Middle Eastern producers has helped limit price increases. Russian crude output rose by 65,000 barrels per day in September. Production reached 8.43 million barrels daily, although it remained 870,000 barrels below last year’s level. These figures indicate that supply remains below earlier levels despite the recent monthly increase.
Middle Eastern oil exports also showed signs of recovery. Crude exports from Gulf producers increased by 4.4 million barrels per day in September. They reached approximately 75% of their prewar levels. As a result, additional exports helped support global supply despite continuing shipping disruptions.
However, alternative transport routes come with higher costs and operational risks. Some oil shipments have continued through different routes and logistical arrangements. These measures have prevented a more severe supply shock so far. Still, further attacks could quickly disrupt global oil flows and increase transportation expenses.
US inventory figures provided another important signal for traders. Crude oil and distillate stocks declined during the week ending October 9. Meanwhile, gasoline inventories increased, according to preliminary industry data. US crude stocks fell by 11.1 million barrels, exceeding analysts’ expectations.
Despite the substantial inventory decline, the market showed little upward movement. Investors appeared reluctant to push prices higher amid uncertain demand and geopolitical risks. Analysts noted that the limited reaction suggested caution at current price levels. Consequently, traders continued balancing tighter inventories against the possibility of improved supply.
The US Energy Information Administration planned to release its official inventory figures later Thursday. The report was scheduled for 5 p.m. Saudi time following a one-day delay. Investors were watching the figures for confirmation of the preliminary estimates. The results could influence near-term trading as markets assess supply and demand.
Overall, Oil Prices remain sensitive to shipping disruptions, sanctions policy, and production trends. The Strait of Hormuz continues to pose a major risk to global energy transportation. Meanwhile, additional output and alternative routes have helped reduce immediate supply pressure. Traders will continue watching regional developments and US inventory data for clearer direction.
