Oil prices retreated on September 16 as indications of additional Saudi crude exports through Oman reduced some concerns over the impact of recent attacks on Saudi energy infrastructure. The decline came after a two-day rally and was reinforced by U.S. inventory data showing a smaller-than-expected draw in crude stocks, although geopolitical risks continue to leave global energy markets vulnerable to renewed supply disruptions.

Saudi Supply Routes Ease Immediate Market Pressure

Brent crude futures fell $2.92, or 2.7%, to settle at $105.83 a barrel, while U.S. West Texas Intermediate fell $3.40, or 3.2%, to $102.43. The decline followed reports that Saudi Arabia was offering additional crude cargoes to Asian refiners through ship-to-ship transfers near Oman’s Sohar port.

The alternative export arrangements are significant because attacks on Saudi Arabia’s East-West pipeline had disrupted the country’s ability to move crude toward the Red Sea. The availability of another route reduces the immediate impact on international supply, with UBS analyst Giovanni Staunovo describing the developments as evidence that concerns over a larger disruption were easing.

Yanbu Disruption Highlights Saudi Export Vulnerability

The latest developments follow a sharp rise in prices after crude loadings at Saudi Arabia’s Yanbu export hub were suspended and Riyadh canceled some shipments to European customers. The disruption followed strikes on the East-West pipeline, which supplies Yanbu and has become particularly important since the conflict affecting the Strait of Hormuz restricted the traditional route for Saudi crude exports.

Before the war, the Strait of Hormuz carried roughly one-fifth of global oil and liquefied natural gas supplies. Vessel traffic remains severely depressed, however. Preliminary shipping data showed only four visible vessel passages through the strait on Tuesday, down from seven the previous day and well below the 10-day average of 18.

U.S. Inventories Add Further Downward Pressure

Oil prices also faced pressure from U.S. petroleum inventory data. U.S. crude stocks declined last week, but the reduction was smaller than analysts had expected, while gasoline and distillate inventories increased. The combination suggests that immediate supply tightness in the world’s largest oil-consuming economy may be less severe than recent price movements had implied.

The inventory figures are important because they provide a counterweight to geopolitical supply concerns. If U.S. stockpiles continue to show adequate availability, the market may have greater flexibility to absorb disruptions elsewhere. However, persistent disruptions in major exporting regions could quickly change that balance, particularly if alternative shipping routes become constrained.

Russia and Hormuz Remain Key Supply Risks

Additional uncertainty comes from Russia, where Moscow is reportedly preparing to extend its diesel export ban through the end of October, according to Vedomosti. Restrictions on refined-product exports could further tighten international fuel markets even if crude supply remains comparatively resilient.

For global investors, the interaction between Saudi export capacity, Hormuz traffic, Russian fuel policy and U.S. inventories will remain central to the energy outlook. For Israel and other economies exposed to imported energy and global freight conditions, sustained oil prices above $100 a barrel could continue influencing inflation, transportation costs and broader financial conditions.

Looking ahead, the market will monitor whether Saudi Arabia can maintain alternative crude shipments through Oman and whether Yanbu operations and the East-West pipeline can return to normal. A sustained recovery in Saudi exports and stronger U.S. inventories could place additional pressure on prices, while renewed infrastructure attacks, continued restrictions around Hormuz or further disruptions to Russian fuel exports could quickly reverse the latest decline.