Key Moments
- WTI traded near $96.60 per barrel during Asian hours on Thursday, marking a second straight session of declines.
- Saudi Arabia planned to partially restore its East-West pipeline within days and return it to full capacity within six weeks.
- U.S. EIA data showed crude inventories fell by about 640,000 barrels, far short of the expected 1.62 million-barrel draw.
Saudi Infrastructure Recovery Eases Supply Fears
West Texas Intermediate (WTI) crude futures continued to retreat for a second consecutive session, with prices hovering around $96.60 per barrel in Asian trading on Thursday. The downturn followed indications that Saudi Arabia is on track to bring a key export route back online faster than many market participants had feared.
Authorities in Saudi Arabia intend to restore roughly half of the throughput capacity on the country’s East-West pipeline within days and to return the line to full operational status within six weeks. The pipeline, which offers a crucial alternative to shipping crude through the exposed Strait of Hormuz, sustained damage in drone attacks last week.
Hormuz Flows Supported by U.S. Military Assistance
At the same time, Saudi Arabia has been working to move greater crude volumes directly through the Strait of Hormuz, supported by U.S. military assistance. According to U.S. Energy Secretary Chris Wright, 18 million barrels of crude and petroleum products successfully transited the Strait earlier this week, helping to alleviate immediate concerns about supply disruptions.
Softer-Than-Expected U.S. Inventory Draw Weighs on Prices
Additional pressure on WTI came from the latest weekly data from the U.S. Energy Information Administration (EIA), which pointed to a smaller drawdown in domestic crude stocks than analysts had forecast.
The EIA reported that U.S. crude inventories declined by about 640,000 barrels over the prior week. That figure was well below the 1.62 million-barrel decrease expected by energy analysts in a Reuters poll, suggesting demand may be less robust than anticipated or that supply buffers are thicker than markets had projected.
| U.S. Crude Inventory Data | Volume (barrels) |
|---|---|
| Reported weekly crude stock change | -640,000 |
| Analysts’ expected stock change | -1,620,000 |
Geopolitical Risk Premium and U.S. Policy in the Middle East
Market focus also remains on the broader geopolitical backdrop in the Middle East and the implications for crude pricing. Analysts at TD Securities highlighted the role of U.S. policy and military engagement in shaping risk perceptions in oil markets.
The bank stated that “a less aggressive or supportive military presence in the Middle East would see an elevated geopolitical risk premium remain in markets,” adding that Iran would likely aim to “consolidate control over the Strait,” which would bolster the potential for ongoing supply-related concerns in the oil market.
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