Oil prices edged higher on Tuesday but remained under pressure after Saudi Aramco unexpectedly reduced its November crude prices for Asian customers.
At the same time, renewed military tensions in the Middle East helped limit further losses in the oil market.
Oil Prices Edge Higher
Brent crude futures rose 0.3% to $100.60 a barrel by 22:10 ET.
West Texas Intermediate crude futures gained 0.2% to $89.58 a barrel.
Despite the modest rebound, sentiment remained cautious after Saudi Aramco announced deeper price cuts for Asian buyers.
Saudi Aramco Cuts November Crude Prices
Saudi Aramco reduced its November oil prices for Asia to their lowest level in six years.
By contrast, the company slightly increased prices for customers in northwest Europe and the Mediterranean.
The move surprised traders and raised fresh concerns about the outlook for oil demand.
According to Reuters, Saudi Aramco has also been offering significant discounts on crude loaded from Oman in an effort to offset record-high shipping costs.
Demand Concerns Pressure Crude
The Aramco price cuts added to worries that high oil prices could eventually weaken global demand.
These concerns have become more important as the conflict in the Middle East continues with few signs of a near-term resolution.
Crude prices also fell sharply on Monday after signs emerged that oil exports from the region were improving.
The Group of Seven nations also pledged to increase oil supplies by 100 million barrels.
However, it remains unclear whether those barrels will form part of an existing emergency release program.
Middle East Oil Exports Recover
Shipping data showed that Gulf oil exports returned to pre-war levels for roughly half of September.
The improvement was largely driven by increased Saudi shipments from both the Red Sea and the Persian Gulf.
Higher exports have eased some fears of an immediate supply shortage.
However, geopolitical risks remain elevated.
Saudi-Houthi Fighting Supports Oil Prices
Saudi-backed Yemeni forces retook coastal areas near the Bab el-Mandeb Strait from Iran-backed Houthi forces this week.
The development raised hopes that shipping conditions in the Red Sea could improve.
The Houthis had previously captured strategic positions near the strait and launched missile attacks against vessels operating in the area.
They later responded to the Saudi-backed offensive by targeting several Saudi locations, including an Aramco refinery in Riyadh.
Strait of Hormuz Tensions Remain in Focus
The renewed fighting between Saudi-backed forces and the Houthis has become another major risk for global oil markets.
The conflict has intensified as part of the broader regional instability linked to tensions between the United States and Iran.
The U.S. and Iran also remain at odds over the Strait of Hormuz, one of the world’s most important routes for global oil shipments.
As a result, traders continue to balance improving Middle East oil exports against the risk of further military escalation.
