Oil Holds Higher, Saudi Attacks Rekindle Supply Risks
Oil prices continued their gains for a second day after Saudi Arabia announced its production capacity was reduced due to attacks on energy infrastructure. However, daily movements remained volatile, and the contract remained on track for its biggest weekly decline since June, following a sharp correction following the US-Iran ceasefire announcement.
In Asia on Friday, Brent traded around $96 per barrel, after rising 1.2% on Thursday in volatile trading. WTI traded around $98 per barrel. On a weekly basis, Brent remains down more than 11% since the US and Iran declared a ceasefire on Tuesday.
The official Saudi news agency said the country's production capacity was down by about 600,000 barrels per day due to the attacks. According to Bloomberg calculations, this figure is equivalent to about 10% of the kingdom's normal crude exports, reinforcing the market's assessment that the risk of supply disruptions has not yet fully dissipated.
In addition, attacks on pumping stations serving the East-West pipeline (the route Saudi Arabia uses to export via the Red Sea) are said to have cut daily throughput by about 700,000 barrels this week. Kuwait also reported intercepted drone attacks and said several vital facilities were targeted, heightening market concerns about energy security in the region.
On the demand side, several countries dependent on Middle Eastern supplies are beginning to draw down reserves. Japan plans to release about 20 days of oil from its stockpiles in May, while state-owned refineries in China have been given permission to tap commercial reserves, and India's largest private refiner is said to have begun limiting fuel purchases at the pump to manage stocks.
Market focus now shifts to Islamabad, where US Vice President JD Vance is expected to lead a US delegation for talks with Iranian officials on Saturday. A key issue is the Strait of Hormuz, which remains near-locked and a source of uncertainty over energy flows. Trump has also highlighted alleged Iranian charges on tankers, while Tehran has signaled that “Hormuz management” could enter a new phase—keeping risk premiums sensitive to diplomatic developments over the weekend.
5 key points:
- Oil rose for two days, but remains headed for its biggest weekly decline since June.
- Brent is around $96 and WTI around $98; Brent is still down >11% this week.
- Saudi Arabia: Production capacity down -600,000 bpd due to attacks on energy infrastructure.
- East-West pipeline affected; daily throughput down -700,000 bpd, Kuwait also reports drone threats.
- Markets await US-Iran talks in Islamabad; Hormuz remains a key driver of risk premiums. (asd)
Source: Newsmaker.id
