Global crude prices dropped more than 1 percent on Thursday as traders balanced persistent attacks on commercial vessels near the Strait of Hormuz against prospective United States efforts to lower maritime transport costs.
Brent crude fell $1.76, or 1.7 percent, to $104.30 a barrel by 09:25 a.m. Saudi time, while US West Texas Intermediate dropped $1.06, or 1.1 percent, to trade at $94.03 a barrel. The retreat reversed the previous day's advances, when WTI touched a three-week peak after Yemen's Iran-backed Houthis struck Saudi Aramco's headquarters and Tehran pledged fresh tactics against regional maritime traffic.
Regional shipping risks escalated further after maritime officials confirmed on Wednesday that a container vessel and a dry bulk carrier both sank near the strait within 24 hours after being struck by projectiles in separate incidents. Iran has intensified strikes over the last 10 days, citing a response to a US naval blockade of its ports and tighter sanctions imposed last month.
To mitigate soaring transport costs caused by the conflict, the Trump administration is considering softening sanctions on shadow-fleet vessels that carry petroleum from Iran, Russia, and Venezuela, a US official stated on Wednesday. The discussions focus on potentially permitting "legal oil" to travel aboard previously blacklisted ships.
Expanding crude supply has also helped contain price increases. According to the International Energy Agency, Middle East Gulf exporters raised shipments by 4.4 million barrels per day in September to reach approximately 75 percent of prewar levels. Russian crude production also climbed by 65,000 bpd during the same month to 8.43 million bpd, though it remained 870,000 bpd below the previous year's level.
"While there is little concrete evidence of a near-term peace deal, oil continues to find its way to buyers through alternative routes and logistical arrangements," said Priyanka Sachdeva, head of market insights at Phillip Nova. She noted that these alternative steps have averted a harsher supply squeeze despite generating higher transport expenses.
In the United States, crude reserves tumbled by 11.1 million barrels in the week ended Oct. 9, according to market sources citing American Petroleum Institute figures. The draw surpassed market forecasts, while gasoline inventories expanded and distillates declined.
"Despite the sharp inventory draw, oil prices barely reacted. The failure to rise on bullish news suggests investors are cautious about chasing prices higher at current levels," brokerage Haitong Futures said in a market note. Official storage statistics from the US Energy Information Administration are scheduled for release later Thursday following a holiday postponement.
