Oil prices fell for a third session on Friday as progress repairing Saudi Arabia’s damaged export infrastructure eased the immediate supply panic, even as shipping through the Strait of Hormuz remained severely disrupted.

Brent crude slipped about 1% to roughly $104 a barrel, while West Texas Intermediate traded near $101. Both benchmarks have retreated sharply from this week’s highs near $110 and $106.

The reversal reflects growing confidence that Saudi Arabia can restore part of its East-West pipeline within days and keep more barrels moving through alternative routes.

Saudi repair hopes are taking out some risk premium

The market’s biggest relief has come from Saudi Arabia.

Riyadh is working to restore roughly half of the capacity of its damaged East-West pipeline, with full repairs potentially taking around six weeks.

The route normally carries 3 million to 4 million barrels a day towards the Red Sea, providing an important alternative to Hormuz.

Saudi Aramco has also offered additional crude to Asian buyers through ship-to-ship transfers near Oman, giving traders greater confidence that exports can continue despite infrastructure damage.

ANZ Research analysts said that the prospect of returning Saudi volumes, combined with profit-taking after two weeks of gains, was helping pull crude lower.

That has shifted the market away from pricing an immediate multi-million-barrel supply loss.

Hormuz remains the bigger unresolved risk

The physical market is hardly back to normal.

Only four commodity vessels passed through the Strait of Hormuz on Thursday, according to preliminary Kpler data, compared with a 10-day average of around 16.

Before the conflict escalated, the waterway handled roughly one-fifth of global oil and gas shipments.

Iran’s Revolutionary Guard has also said it struck a Togo-flagged tanker attempting to pass through the strait, keeping the risk of further disruption elevated.

Analysts noted that Saudi pipeline repairs should ease some physical pressure, but continued restrictions around Hormuz and disruptions to other global supplies are likely to keep crude prices supported.

That helps explain why Brent remains comfortably above $100 even after three days of losses.

US inventories and Fed policy complicate the outlook

The US supply picture is also more balanced than earlier private data suggested.

Official Energy Information Administration figures showed commercial crude inventories fell by about 640,000 barrels last week to 423.4 million barrels.

That marked a third consecutive decline, although the draw was smaller than analysts expected.

Demand is the other side of the equation. The Federal Reserve raised rates by 25 basis points this week and signalled that further tightening may follow, increasing concern that higher borrowing costs could eventually slow fuel consumption.

For now, crude is caught between improving logistics and an unusually fragile supply system.

Saudi repair progress may keep pulling risk premium out of Brent and WTI, but continued disruption through Hormuz means another escalation could quickly reverse the latest decline.

That makes the physical flow of barrels most important signal for oil’s next move.

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