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Oil prices fell by more than 1% in early trading on Thursday, as investors assessed supply risks resulting from attacks on ships in the Strait of Hormuz, and US efforts aimed at reducing shipping costs by easing sanctions imposed on some oil tankers.
By 01:16 GMT, Brent crude futures fell $1.39, or 1.31%, to $104.67 a barrel, while US West Texas Intermediate crude fell $1.02, or 1.07%, to $94.07, erasing their gains from the previous session.
US crude had recorded its highest level in three weeks during Wednesday's session, following an attack targeting a Saudi Aramco facility and Iran's announcement of adopting new methods to target ships in the Strait of Hormuz.
Shipping industry officials said that a container ship and a dry cargo ship sank near the strait within the past 24 hours after being hit by projectiles in two separate incidents.
Attacks in the strait have escalated over the past ten days, while Iran said it is intensifying its operations in response to the US blockade of its ports and the tightening of sanctions last month.
In contrast, the administration of US President Donald Trump is considering easing sanctions imposed on what is known as the "shadow fleet," which transports oil and petroleum products from countries including Russia, Iran, and Venezuela, in an effort to ease pressure on prices and contain rising shipping costs.
A US official said that discussions are focusing on the possibility of allowing the flow of "legitimate oil" on board ships that were previously subject to sanctions.
Increased production from Russia and the Middle East contributed to limiting the rise in prices. The International Energy Agency reported that Russia's crude oil production rose by 65,000 barrels per day in September to 8.43 million barrels per day, but remained 870,000 barrels per day lower compared to the same period last year.
The agency added that oil exports from Gulf countries rose by 4.4 million barrels per day in September, reaching about 75% of pre-war levels.
In the United States, preliminary data from the American Petroleum Institute, according to market sources, showed a decline in crude oil and distillate inventories and an increase in gasoline inventories last week. Crude inventories fell by 11.1 million barrels in the week ending October 9.
The US Energy Information Administration is scheduled to release official inventory data later on Thursday, after delaying it by one day due to the Columbus Day holiday.
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