FX.co ★ CL/Crude Oil

West Texas Intermediate (WTI) crude oil prices fell for the second consecutive day, settling around $96.60 per barrel in Asian trading on Thursday. This decline was primarily driven by easing logistical concerns in the Middle East. Earlier reports indicated that Saudi Arabia was actively working to restore capacity to its damaged East-West pipeline, a vital overland route bypassing the sensitive Strait of Hormuz. Recent drone attacks had damaged the pipeline, disrupting global energy supply chains and driving up risk premiums. However, news that parts of the pipeline could be operational again within days and fully restored within six weeks significantly eased market tensions, allowing traders to price in expectations of a smooth recovery in regional oil flows. Furthermore, successful cooperation between Saudi authorities and the U.S. military has facilitated the safe passage of larger volumes of crude oil through regional obstructions, leading to further shifts in the supply landscape. U.S. Energy Secretary Chris Wright confirmed that approximately 18 million barrels of crude oil and refined products successfully transited the Strait of Hormuz, effectively restoring shipping capacity to pre-conflict levels and easing concerns about a prolonged blockade—a positive development. Meanwhile, domestic inventory data released by the U.S. Energy Information Administration (EIA) added to the downward pressure on oil prices. Official data showed that U.S. crude oil inventories fell this week by a much smaller margin than expected, by about 640,000 barrels, significantly less than the 1.62 million barrel decline forecast by industry analysts. This suggests either weaker domestic demand or a larger-than-expected inventory buildup.

While these immediate factors contributed to the recent decline in oil prices, broader structural assessments by financial institutions such as TD Securities indicate that the likelihood of a permanent disappearance of the geopolitical risk premium for oil remains low. Analysts believe that the long-term trajectory of U.S. foreign policy and the military posture in the Middle East will continue to be a crucial benchmark for the crude oil market. Specifically, any reduction in the Western military presence or strategic monitoring in the future could trigger immediate supply-side concerns, as regional actors, such as Iran, might seek to bolster their strategic influence or consolidate their control over the Strait of Hormuz. Therefore, while recent technical adjustments and successful logistical maneuvers have helped to lower West Texas Intermediate crude prices from their highs of recent months, ongoing geopolitical tensions ensure that the energy market remains highly sensitive to any sudden security developments in the region.