Oil Prices Fall for Third Day as Supply Disruption Fears Ease; Why Is Crude Oil Falling?

Oil prices fell more than 1% on Friday, September 18, extending losses for a third straight session as the market shrugged off fresh Saudi-Houthi strikes and focused instead on efforts to keep Middle Eastern crude flowing.

Brent crude futures fell $1.01, or 1.04%, to $103.70 a barrel, while US West Texas Intermediate (WTI) declined 92 cents, or 0.92%, to $101 a barrel. Both benchmarks had ended about 1% lower on Thursday.

The slide comes after crude prices touched around four-month highs earlier this week following disruptions to Saudi Arabia's East-West pipeline and the suspension of crude loadings at its Red Sea export hub of Yanbu.

Why Is Crude Oil Falling Today?

The latest sell-off is largely about the supply premium coming out of crude. Traders are betting that alternative routes and a faster recovery in Saudi shipments could limit the immediate hit to global supply.

Reuters reported that three pumping stations along Saudi Arabia's East-West pipeline were damaged in recent attacks. The pipeline is an important export route, with traders estimating that a prolonged shutdown could affect as much as 4% of global oil supply.

Saudi Arabia is now looking at ways to keep barrels moving while repairs continue. Bloomberg reported that the kingdom was seeking to restore about half of the pipeline's capacity within days and was offering additional crude cargoes to Asian refiners through ship-to-ship transfers off Oman's Sohar port.

Those efforts have taken some heat out of the crude market. The market has also largely looked past the latest Saudi-Houthi strikes. The two sides exchanged fresh attacks on Thursday, raising concerns that the conflict could spread further across the region. For now, however, traders appear more focused on whether the physical barrels can reach the market.

That leaves oil prices in a tug-of-war between supply risks and the prospect of disrupted barrels being replaced through alternative routes.

Oil Price Outlook: $100 Remains The Key Level

The correction has taken Brent closer to an important technical level, but crude remains above $100 a barrel.

Anindya Banerjee, Head of Research – Currency, Commodities and Interest Rates at Kotak Neo, said the recent move in crude needs to be viewed alongside the sharp rise in refined fuel prices.

“Brent fell about 3.6% to just below $102, its lowest level in a week, but diesel futures in both the US and Europe moved to record highs,” Banerjee said, pointing to continued stress in refined products rather than crude itself.

According to Banerjee, some of the disruption premium has come out of crude on expectations that Saudi supply could return faster. However, the physical barrels have not yet fully returned, while refinery disruptions in Russia and West Asia remain a risk.

For Brent, Banerjee sees $100 as the critical line. A sustained close below that level could turn the technical setup negative. Until then, he expects $100-$110 to remain the operative range, with $110 acting as immediate resistance.

For the market, the next big trigger will be the pace at which Saudi Arabia restores pipeline capacity and how much crude can be rerouted through alternative channels. Any fresh hit to energy infrastructure or shipping could put the supply premium back into prices, while a faster recovery in exports could keep the bears in control.

With both Brent and WTI still above $100, the crude market remains vulnerable to sharp swings as traders weigh actual supply flows against the risk of further regional disruption.

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