Oil Extends Decline on Recovery in Middle East Exports; WTI Near $89

International oil prices extended their decline for a second day as crude exports from the Persian Gulf recovered and Saudi Arabia sharply cut selling prices.

Bloomberg reported on Oct. 6 that West Texas Intermediate traded near $89 a barrel after falling 3.7% over the previous two sessions. Brent closed around $100 a barrel.

Supply conditions are improving as Middle Eastern producers increase crude shipments through the Strait of Hormuz. Risks surrounding the waterway remain high, but crude exports from the Persian Gulf are rising as more tankers resume transits.

Kuwait said it has restored crude production to about 75% of the level seen before the war with Iran. Iraq is also moving to secure additional tankers to expand crude shipments through the Strait of Hormuz.

Saudi Aramco, the kingdom's state-owned oil company, cut the selling price of its flagship Arab Light grade for Asian customers to the lowest level in six years. The increase in Middle Eastern crude supply, coupled with the price cut, is being interpreted as a sign that supply pressure in the oil market is easing.

Even so, Brent prices are still up more than 60% this year after the U.S. and Israel attacked Iran in February. Oil transport in the Middle East is returning to near prewar levels, but supplies of refined products remain constrained by factors including Ukraine's attacks on Russia.

The market is also focused on the U.S. Energy Information Administration's short-term energy outlook due later on Oct. 6. The report is expected to include the outlook for fuel markets in the Northern Hemisphere this winter and may offer clues on supply and demand conditions for diesel and heating oil, which remain at elevated price levels.