Oil prices stabilized after a sharp decline, amid signs that supply disruptions in the Middle East are easing, with expectations that a major pipeline will soon be restarted.
Brent crude traded near $106 a barrel after losing 2.7% on Wednesday, while West Texas Intermediate crude surpassed $102. Saudi Arabia aims to bring about half of the damaged East-West pipeline's capacity back online within days and restore full operation within six weeks, according to a person familiar with the matter.
Harris Khurshid, chief investment officer at Karobaar Capital LP, said: I wouldn't describe the situation as a complete disappearance of risk. The market is regaining some momentum, but not its safety margin.
Crude oil has risen by about three-quarters of its value this year, after the war between the United States and Iran reduced flows from the Middle East, while the conflict between Russia and Ukraine continues.
The sharp rise in oil and fuel costs has exacerbated global inflationary pressures, prompting the Federal Reserve to raise interest rates on Wednesday and signal further tightening.
The East-West pipeline, which carries oil through Saudi Arabia to its Red Sea coast, was damaged in attacks last week, driving prices higher. The pipeline has become a vital alternative route for shipments passing through the Strait of Hormuz, which remains a point of contention between Washington and Tehran.
Estimates of oil flows through the Strait of Hormuz vary
Estimates vary regarding the quantities that pass through the Strait of Hormuz, which connects the Arabian Gulf to global markets.
U.S. Energy Secretary Chris Wright told Fox Business that 18 million barrels of crude oil and petroleum products passed through the Strait of Hormuz on a single day this week, and that the seven-day average was 11 million barrels per day. Clarksons Research, however, estimated the daily figure at around 8 million barrels.
President Donald Trump is scheduled to meet with leaders from the Gulf states next Tuesday in New York on the sidelines of the United Nations General Assembly to discuss developments in the conflict, Axios reported, citing people familiar with the plan.
Trump said during a campaign rally in North Carolina that the war would end very soon. He added: We can reach an agreement anytime we want.
Congress passes bill on Russian oil buyers
In the United States, Congress also gave final approval to a bill that would give Trump new powers to impose tariffs on countries that buy Russian oil products, potentially including China and India.
The legislation, which will be sent to the president's office for his signature, was welcomed by Ukrainian officials looking for signs of support from Washington in their fight against Russia's war on their country.
For months, Kyiv has been targeting Russian oil refineries with waves of drone attacks. This has prompted Moscow to ban most diesel exports to prioritize domestic supplies, and officials are considering extending the restrictions until October. US retail prices for this industrial fuel have soared to record highs.
Latest price movements
Brent crude futures for November settlement were largely unchanged at $105.87 a barrel at 9:49 a.m. in Singapore.
West Texas Intermediate (WTI) crude futures for October delivery fell 0.2% to $102.22 a barrel. WTI lost 3.2% on Wednesday, its biggest drop since August 4.
