Brent slides 0.9% as Strait of Hormuz oil flows run 38% below prewar baseline

Two Indian crew missing after drone attack near Oman’s Sohar anchorage

Crude oil futures retreated on Tuesday as traders weighed persistent Middle East supply risks against the prospect of additional Russian diesel exports reaching global markets. December Brent crude fell 0.9% to $105.73 a barrel, while December West Texas Intermediate dropped 1.1% to $91.81 a barrel, according to The Wall Street Journal.

Analysts at ANZ Research said the decline could reflect a technical correction after recent gains. They added that further downside may be limited by escalating Middle East tensions, including renewed drone and missile attacks in Saudi Arabia and increasing attacks on tankers around the Strait of Hormuz that are constraining oil flows from the Persian Gulf.

Preliminary Kpler data show oil flows through the Strait of Hormuz fell sharply toward the end of last week. Confirmed flows dropped to 2 million barrels a day on Saturday, down from 6.7 million on Friday and 22.8 million on Thursday. Over the seven days through Saturday, volumes averaged 10.5 million barrels a day, about 38% below the prewar baseline of 17.1 million barrels a day. The figures exclude Iranian-origin transits and could be revised higher.

Saudi Arabia extended the suspension of operations at King Khalid International Airport in Riyadh on Monday following attacks by the Iran-backed Houthi militia, the WSJ report said.

Shipping risks also remained elevated. The U.K. Maritime Trade Operations issued fresh warnings Monday that a crude oil tanker and an oil-products tanker had been struck by unidentified projectiles while transiting the Strait of Hormuz. The agency also confirmed a drone attack on a tanker near Oman’s Sohar anchorage on Sunday, which left two Indian crew members missing, according to Indian authorities.

U.S. Central Command said it disabled a commercial cargo vessel in the Gulf of Oman on Saturday after the ship attempted to breach the U.S. blockade of Iranian ports. The military said it had turned around 135 vessels since the blockade resumed July 14.

Oil markets are also assessing a proposed U.S.-Russia agreement intended to increase diesel supplies, but analysts at ING said the proposed volumes would do little to resolve tightness in global middle-distillate markets. The bank also said the market remains skeptical of a proposed Russia-Ukraine ceasefire covering energy infrastructure after reports of further Russian strikes on Ukrainian energy targets.

Offshore production in the Gulf of Mexico, which the U.S. now calls the Gulf of America, continued to recover after Hurricane Isaias. About 604,503 barrels a day, or 29.6% of offshore oil output, remained shut in as of Monday morning, down from as much as 1.5 million barrels a day on Friday, according to the U.S. Marine Minerals Administration. Five production platforms and one drilling rig remained evacuated.