Oil futures declined on Thursday as markets considered reports that Washington could ease restrictions on certain oil-carrying vessels, potentially lowering transport costs despite continued attacks on commercial shipping near the Strait of Hormuz.
Brent crude futures fell 1.9% to $104.02 per barrel at 03:35 ET (07:35 GMT), while US West Texas Intermediate (WTI) futures dropped 1.1% to $94.04 per barrel.
The decline came against a backdrop of continuing security threats to oil shipments from the Middle East, although recovering export volumes and the possibility of changes to US sanctions policy provided some downward pressure on prices.
Shipping Attacks Threaten Key Middle East Oil Routes
Maritime officials cited by Reuters reported that two commercial ships had sunk near the Strait of Hormuz during the previous 24 hours after being struck by projectiles in separate incidents.
The vessels were identified as a container ship and a dry bulk carrier.
The incidents followed an increase in attacks on commercial shipping in the area, raising concerns about the security of oil exports from the Persian Gulf.
The Strait of Hormuz is an important route for global energy transportation, with disruptions potentially affecting crude deliveries, tanker availability and freight costs.
Security concerns have also increased around the Bab el-Mandeb Strait, which links the Red Sea to the Gulf of Aden.
Fighting between Saudi Arabia and Houthi militants in Yemen has raised the possibility of further disruption to commercial shipping in the region.
Continued instability across these routes could complicate the movement of crude oil and refined petroleum products, increasing logistical costs for producers and buyers.
Washington Reportedly Weighs Changes to Shadow Fleet Restrictions
US President Donald Trump is reportedly considering easing sanctions affecting certain vessels associated with the so-called shadow fleet.
These ships are used to transport oil and petroleum products originating from sanctioned countries, including Russia, Iran and Venezuela.
The proposed relaxation of restrictions is being considered as a possible way to reduce international shipping costs and ease pressure on oil prices.
Sanctions can limit the number of vessels available for transporting petroleum, contributing to higher freight rates when shipping capacity is already constrained.
Allowing additional tankers to operate could improve transport availability and reduce costs for oil shipments.
However, reports have not established whether the US administration will proceed with the changes or how any revised restrictions would be implemented.
The possibility of sanctions relief nevertheless influenced market assessments of future supply conditions.
Russian Oil Output Climbs While Middle East Exports Recover
Figures from the International Energy Agency (IEA) indicated that Russian crude oil production increased by 65,000 barrels per day in September to 8.43 million barrels per day.
Despite the monthly increase, production remained 870,000 barrels per day below the level recorded in the same period last year.
The IEA also reported a recovery in crude oil exports from the Middle East.
Regional exports rose by 4.4 million barrels per day during September, reaching approximately 75% of their levels before the outbreak of the Iran war in late February.
The figures suggest that some disrupted supply flows have been restored, although regional instability continues to create uncertainty.
The agency also warned that diesel markets could remain tight well into 2027 because of continued crude supply disruptions and refinery outages.
Meanwhile, the IEA forecast a decline of 2.6 million barrels per day in global oil demand during 2026.
These developments have added to the factors influencing crude prices, as traders balance geopolitical supply risks against production trends and demand expectations.
API Reports Unexpected 11.12 Million-Barrel Decline in US Crude Stocks
US oil inventory figures provided a separate indication of tighter near-term supply conditions.
According to the American Petroleum Institute (API), crude inventories declined by 11.12 million barrels during the week ended 9 October.
The result contrasted with market expectations for an increase of approximately 1.9 million barrels.
The drawdown followed disruptions to oil production along the US Gulf Coast caused by Hurricane Isaias, which made landfall late the previous week.
The storm was estimated to have temporarily halted nearly two-thirds of the region’s oil production.
The reduction in output contributed to tighter crude availability and the substantial weekly inventory decline.
However, the API figures are preliminary, and investors were awaiting the official weekly inventory report from the US Energy Information Administration later on Thursday.
The government data would provide further evidence of the extent of the supply disruption and its impact on US crude inventories.
Despite the unexpected drawdown, oil prices moved lower as markets assessed the potential impact of reduced sanctions, recovering international supply flows and continuing shipping risks in the Middle East.
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