Brent crude futures fell 79 cents, or 0.75 per cent, to $104 a barrel, while US West Texas Intermediate (WTI) futures declined 70 cents, or 0.69pc, to $101.20 a barrel. Both benchmarks ended about 1pc lower on Thursday.
Brent is on track for its first weekly decline in three weeks, down 0.5pc, while WTI is heading for a weekly gain of 1.2pc.
Markets largely brushed aside concerns over fresh supply disruptions after Saudi Arabia and Yemen’s Iran-backed Houthis exchanged new strikes across their border on Thursday, widening the conflict in the region.
Oil prices had risen to nearly four-month highs earlier this week after reports that crude loadings at Saudi Arabia’s Red Sea export hub of Yanbu had been suspended. Riyadh had also cancelled some deliveries to Europe after its East-West pipeline was damaged in an attack last week.
Prices have since eased following reports that Saudi Arabia was working to restore around half of the East-West pipeline’s capacity within days. The kingdom was also reportedly offering additional crude cargoes to Asian refiners through ship-to-ship transfers off Oman’s Sohar port.
“Recent efforts to restore Saudi export capacity have reduced some of the immediate supply anxiety,” said Priyanka Sachdeva, head of market insights at Phillip Nova.
Sources have provided varying estimates of how long it could take to fully restore the pipeline and return crude flows to normal.
Oil prices, however, remain above $100 a barrel as markets await clearer evidence of a sustained improvement in supplies, analysts said.
“The key question is whether physical flows can normalise and what could be the timeline. If we see a sustained improvement in Hormuz traffic, some of the geopolitical premium can unwind further,” Sachdeva said.
The transportation of oil through the region remains vulnerable to disruption.
Iran’s Revolutionary Guards Navy said a Togo-flagged oil tanker was struck on Thursday while attempting an “illegal passage” through the Strait of Hormuz, Iranian state media reported early on Friday.
The United States and Iran have not held peace talks since an interim agreement reached in June collapsed within weeks. The conflict is expected to be discussed at the United Nations General Assembly next week, while an Iranian delegation will be permitted to attend, according to the US State Department.
