Oil Gains on Saudi Supply Hit, but Poised for Sharp Weekly Decline

Mumbai, April 10: Brent crude prices hovered near $97 per barrel on April 10 after fresh attacks on Saudi Arabia’s energy infrastructure disrupted output, although oil was still headed for its steepest weekly decline since June as easing geopolitical tensions weighed on sentiment.

The international benchmark rose amid supply concerns after strikes on key Saudi oil facilities curtailed production and disrupted flows through critical infrastructure. Recent attacks are estimated to have reduced the kingdom’s oil output by around 600,000 barrels per day and hit the East-West pipeline, tightening global supply.

The supply shock provided short-term support to prices, with Brent climbing back towards the $97 mark and US crude also trading higher. Market participants remain highly sensitive to developments in the Middle East, particularly after weeks of volatility triggered by the ongoing conflict involving Iran and its impact on oil transit routes.

Weekly Loss

However, despite the latest uptick, crude prices are on track for a sharp weekly loss. The decline comes after signs of de-escalation between Washington and Tehran, including a ceasefire agreement that eased immediate fears of prolonged supply disruptions. The cooling of geopolitical tensions has prompted a pullback in prices after a strong rally earlier in the month.

Oil markets have been whipsawed in recent weeks, with Brent previously surging above $100 per barrel amid fears of a major supply crunch following disruptions in the Strait of Hormuz—a key artery for global crude shipments. Around one-fifth of the world’s oil supply typically passes through the strait, making it a critical chokepoint for energy markets.

Risks Remain

While the ceasefire has helped stabilise sentiment, analysts caution that risks remain elevated. The recent attacks on Saudi infrastructure underscore the fragility of supply chains, and any further escalation could quickly reverse the current downward trend in prices.

Adding to the complexity, the physical oil market continues to show signs of tightness even as futures prices ease. Supply disruptions and logistical constraints have kept spot crude prices elevated in several regions, reflecting ongoing challenges in restoring normal flows.

Opposing Forces

For now, the oil market appears to be balancing two opposing forces—lingering geopolitical risks that support prices, and easing tensions that are driving a broader correction. The result is heightened volatility, with traders closely tracking developments in the Middle East for cues on the next directional move.

Overall, while Brent crude remains supported near $97 on supply concerns, the broader trend suggests a cooling in prices, with the market set to log its worst weekly performance in months as fears of an extended supply shock recede.

Source: https://oilprice.com/