Oil prices moved lower on Thursday, extending recent losses as concerns over potential supply disruptions in the Middle East began to ease.
Reports of improving Saudi Arabian oil flows and fresh talks involving the United States and Yemen’s Houthis helped reduce some of the market’s risk premium.
A stronger U.S. dollar also weighed on crude prices after the Federal Reserve raised interest rates and signaled that further tightening may follow.
Brent crude futures fell 0.5% to around $105.31 per barrel, while West Texas Intermediate crude dropped 0.66% to approximately $101.75 per barrel.
Middle East Supply Concerns Begin to Ease
Oil prices lost some momentum after reports suggested that Saudi Arabia was finding alternative ways to keep crude exports flowing.
Saudi Arabia reportedly increased oil shipments through Oman to reduce the risk of disruptions in the Red Sea.
The kingdom was also offering additional crude cargoes to Asian refiners through ship-to-ship transfers near Oman’s Sohar port.
These measures helped reassure traders that Middle Eastern oil supplies could continue despite elevated geopolitical tensions.
US-Houthi Talks Reduce Some Market Anxiety
Oil markets also reacted to reports of discussions between the United States and Yemen’s Iran-backed Houthis.
The Houthis reportedly reaffirmed their commitment to a 2025 ceasefire and indicated that they would avoid attacks on U.S. and Israeli vessels.
The development helped reduce some fears surrounding shipping disruptions in the Red Sea.
However, uncertainty remains high across the region.
Strait of Hormuz Remains a Key Risk
U.S. President Donald Trump also said that Iran was seeking a peace agreement and suggested that the conflict could be moving closer to a resolution.
Despite those comments, Washington and Tehran remain divided over the Strait of Hormuz.
Shipping activity through the critical energy route remains well below levels seen before the conflict.
As a result, traders continue to monitor the region closely for any signs of renewed disruption.
Stronger Dollar Pressures Crude Oil
Oil prices also faced pressure from a firmer U.S. dollar.
The Federal Reserve raised interest rates by 25 basis points to 4.0%, while Fed Chair Kevin Warsh warned that inflation remains too high.
His comments increased expectations that the central bank could raise rates again in the coming months.
A stronger dollar can weigh on oil because crude is priced in U.S. currency. When the dollar rises, oil becomes more expensive for buyers using other currencies.
Crude Oil Still Posts Weekly Gains
Despite Thursday’s decline, crude prices remained higher for the week.
Brent crude had climbed close to $110 per barrel earlier in the week following renewed attacks on Saudi energy infrastructure.
The Houthis reportedly launched a major offensive against Saudi Arabia and disrupted a key east-west pipeline.
Brent was still up around 1.2% for the week.
Red Sea Risks Continue to Support Oil Prices
The Houthis have maintained positions around the Red Sea, increasing concerns over shipping security.
Their presence near the Bab el-Mandeb Strait remains a major risk for global energy markets.
Any disruption in this region could affect one of the world’s most important maritime trade routes.
For that reason, geopolitical tensions continue to provide some underlying support for oil prices.
US Oil Inventories Offer Additional Support
Oil losses were also limited by U.S. inventory data.
Domestic crude stockpiles fell for a third consecutive week, signaling relatively firm demand or tighter available supply.
Lower inventories can support oil prices when traders expect supply conditions to remain constrained.
For now, the direction of crude oil will likely depend on developments in the Middle East, movements in the U.S. dollar and expectations for future Federal Reserve policy.
