Crude oil prices fell in global markets on Thursday despite ongoing conflict in the Middle East, attacks on vessels near the Strait of Hormuz and fears of supply disruptions.

On Thursday (October 15), international benchmark Brent crude prices declined by 1.6%, while US West Texas Intermediate (WTI) crude fell by 1%.

Investors are weighing the risk of supply disruptions caused by attacks on shipping in the Strait of Hormuz against efforts by the US administration to ease restrictions on certain vessels and reduce the cost of transporting energy supplies.

As of 0337 GMT, Brent crude futures had fallen by $1.64, or 1.6%, to $104.42 per barrel. At the same time, US WTI crude futures dropped by 98 cents, or 1%, to $94.11 per barrel, wiping out gains recorded in the previous session.

In the previous session, WTI prices had climbed to their highest level in three weeks. Oil prices rose after Yemen’s Houthi rebels attacked Saudi Aramco’s headquarters and Iran announced new tactics targeting vessels in the Strait of Hormuz.

Maritime officials said on Wednesday that a container ship and a dry bulk carrier sank in two separate incidents near the Strait of Hormuz over the preceding 24 hours.

Attacks in and around the strategic waterway have increased significantly over the past 10 days.

Iran said it had intensified its attacks in response to a US blockade of Iranian ports and tougher sanctions imposed last month.

The ongoing conflict involving Iran has disrupted shipping and pushed transportation costs to record highs. Against this backdrop, the Trump administration is considering easing sanctions on vessels belonging to the so-called “shadow fleet” in an effort to bring oil prices down.

These vessels transport oil and petroleum products from countries such as Russia, Iran and Venezuela.

A US official said on Wednesday that discussions were focused on the possibility of allowing previously sanctioned vessels to transport what Washington considers “legitimate oil”.

Higher production in Russia and the Middle East has helped moderate oil prices. The International Energy Agency (IEA) said on Wednesday that Russia’s crude oil production increased by 65,000 barrels per day in September to 8.43 million barrels per day. However, output remained 870,000 barrels per day below the level recorded a year earlier.

The IEA also reported that crude oil exports from Gulf countries in the Middle East increased by 4.4 million barrels per day in September, reaching approximately 75% of their pre-war level.

Priyanka Sachdeva, head of market insights at Phillip Nova, said in a note to clients that although there were no clear signs of a peace agreement in the near future, oil was continuing to reach buyers through alternative routes and logistical arrangements.

She added that these alternative arrangements had helped avert a major supply crisis. However, they had increased costs, while the global flow of oil remained vulnerable to further disruptions.

Meanwhile, market sources cited data from the American Petroleum Institute on Wednesday showing that US crude oil and distillate inventories declined last week, while gasoline inventories increased.

Sources: Yahoo Finance, Reuters