Oil falls following news of spill near Oman amid worries over supply

Oil prices fell on Thursday as investors weighed waning global demand against continued supply disruption in the Middle East.

At 4:39 a.m. ET, front-month Brent crude oil futures were down 1.4% at $87.66 a barrel. U.S. West Texas Intermediate crude futures were down 1.5% at $82 a barrel.

Overnight, prices had moved higher.

The International Energy Agency said Wednesday that global oil demand was set to fall further than previously expected this year, amid a deepening impact from the closure of the Strait of Hormuz.

“Renewed hostilities and maritime disruptions” are undermining efforts to boost global oil supply, the IEA said. Supply remained 6.3 million barrels a day lower year-on-year in July.

Meanwhile, deadly attacks on vessels in the Gulf of Oman and the Red Sea keep investors jittery, while a spill near Oman continues to spread.

Oman’s coastline has reportedly started to be affected by a massive oil spill caused by a leaking tanker that ran aground June 30 carrying an estimated 800,000 barrels of Russian oil and is under international sanctions, according to Reuters. It’s leaking near a nature reserve that’s home to wildlife including Arabian Sea humpback whales and ​Socotra cormorants, Reuters reported.

Further, deadly attacks on vessels in the Gulf of Oman and the Red Sea have pushed worries over supply disruptions up another notch. While there are signs that diplomatic efforts toward reopening the Strait of Hormuz are ongoing, the over five-month-old war continues to disrupt energy flows.

“The lack of clarity over the possibility of a full reopening of the waterway could leave oil prices exposed to the upside at a time when the market remains tight,” said Christopher Tahir, a senior market strategist at Exness, adding that any additional setbacks could drive oil prices further up.