Oil prices fall $1 after touching three week high amid Middle East tensions

Crude prices steady after touching three week high

Oil prices fell by more than $1 in early trade on Thursday as investors weighed threats to shipping through the Strait of Hormuz against the possibility of the US easing sanctions on oil-carrying vessels.Brent crude dropped 1.30% to $104.70, shedding $1.38, while West Texas Intermediate (WTI) fell 1.07% to $94.07, a decline of $1.02.The decline followed a sharp rise in WTI in the previous session, when prices reached a three-week high. The rally came after the Houthis attacked Saudi Aramco's headquarters and Iran announced new tactics to target vessels passing through the Strait of Hormuz, with the stated aim of keeping oil prices high.The threat to maritime traffic remained elevated. Two vessels: a container ship and a dry bulk carrier, sank near the strait within 24 hours after separate projectile strikes, maritime officials said on Wednesday.Attacks in the surrounding waters have increased over the past 10 days. Iran has said it is intensifying its strikes in retaliation for the US blockade of Iranian ports and the tougher sanctions imposed last month.

The disruption caused by the Iran war has pushed freight costs to record highs, prompting the Trump administration to consider easing restrictions on vessels used to transport oil from sanctioned countries.A US official said on Wednesday that the administration was considering sanctions relief for so-called shadow fleet vessels, which have carried oil and petroleum products from countries including Russia, Iran and Venezuela.

The move is aimed at helping reduce petroleum shipping costs.Furthermore, rising oil production and exports from Russia and the Middle East have also helped contain prices amid the supply concerns.Russia's crude oil output increased by 65,000 barrels per day in September to 8.43 million barrels per day, according to the International Energy Agency (IEA).However, production remained 870,000 barrels per day lower than a year earlier.The IEA also reported a monthly increase of 4.4 million barrels per day in crude oil exports from Middle East Gulf producers in September. Exports reached around 75% of their prewar levels.Now, the US-Iran conflict has continued for over seven months, keeping oil markets on edge. However, the price spike is far lower than the $126 per barrel levels seen earlier in the crisis.