Brent crude futures fell $1.24, or 1.2%, to $104.59 a barrel by 0049 GMT. US West Texas Intermediate crude dropped $1.14, or 1.1%, to $101.29.
Both benchmarks lost about $3 on Wednesday.
Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, said concerns over tight supply had eased slightly following reports of Saudi crude shipments through Oman.
He also said expectations for progress in easing Middle East tensions ahead of next week’s US-China summit were limiting further gains in oil prices.
Saudi Arabia Seeks Alternative Export Route
Saudi Arabia is offering additional crude cargoes to Asian refiners through ship-to-ship transfers off Oman’s Sohar port, according to people familiar with the matter.
The move could reduce some of the impact on global supplies after attacks damaged the Saudi East-West pipeline, which supplies crude to the Red Sea export hub of Yanbu.
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Oil prices had climbed to around four-month highs earlier this week. Shipping sources said Saudi Arabia had suspended crude loadings at Yanbu and cancelled some shipments to European customers.
The disruptions followed attacks on the East-West pipeline, which feeds the Yanbu port.
Middle East War Keeps Supply Risks Elevated
Yanbu became a key Saudi oil export outlet after Iran began restricting traffic through the Strait of Hormuz following US and Israeli attacks on Iran in late February.
Before the conflict, the strategic waterway carried about one-fifth of global oil supplies.
Two pumping stations linked to the East-West pipeline were damaged in an attack last week. Three oil and security sources said the timeline for repairs remained unclear.
Despite Thursday’s decline, investors remain concerned about the wider Middle East conflict.
Saudi warplanes struck Yemen on Wednesday, while Iran-backed Houthi fighters said they launched drones and missiles toward Saudi cities.
The latest escalation has raised further concerns about the security of regional energy infrastructure and global oil supplies.
US Inventory Data Adds Pressure
The US Energy Information Administration reported a smaller-than-expected decline in US crude inventories last week.
Crude stocks in the world’s largest oil-producing country fell by about 640,000 barrels, according to EIA data.
Analysts polled by Reuters had expected inventories to fall by about 1.62 million barrels.
The smaller draw added another factor weighing on oil prices as traders assessed the balance between global supply risks and underlying demand.
