Saudi Arabia temporarily halted oil shipments through key Red Sea shipping lane
Oil markets inch down after three days of gains
Oil prices edged down on Friday after three days of gains, but were still supported by Saudi Arabia’s halt on transporting crude through a key shipping lane, falling US inventories and easing trade tensions between Washington and Europe.
Brent futures were down 6 cents at $74.48 a barrel by 0043 GMT, after gaining 0.8 per cent on Thursday.
US West Texas Intermediate futures were also 6 cents lower, at $69.55, after posting a nearly 0.5-per cent gain the previous session.
US President Donald Trump and Jean-Claude Juncker, president of the European Commission, the EU’s executive body, struck a surprise deal on Wednesday that ended the risk of an immediate trade war between the two powers.
A trade war would likely hit demand for commodities like oil, which is used heavily in shipping, construction and other economic activity.
Meanwhile, Saudi Arabia said it was “temporarily halting” oil shipments through the Red Sea shipping lane of Bab al-Mandeb after an attack by Yemen’s Iran-aligned Houthi movement.
Any move to block the Bab al-Mandeb, which is between the coasts of Yemen and Africa at the southern end of the Red Sea, would virtually halt oil shipments through Egypt’s Suez Canal and the Sumed crude pipeline that link the Red Sea and Mediterranean.
An estimated 4.8 million barrels per day of crude oil and refined products flowed through the Bab al-Mandeb strait in 2016 toward Europe, the United States and Asia, according to the US Energy Information Administration.
However, Saudi Arabia has the Petroline, also known as the East-West Pipeline, which mainly transports crude from fields clustered in the east to Yanbu for export. That could offset a bottleneck caused by Bab al-Mandeb’s closure.