By: AGBI

Oil prices retreated early on Thursday as more tankers passed through the Bab al-Mandab strait in the Red Sea, easing fears of a global energy supply disruption.

Brent futures fell 1.1 percent to $89.71 a barrel at 04:20 GMT, while US West Texas Intermediate (WTI) crude slipped 0.9 percent to $83.78.

Both benchmarks rose in the previous session — Brent by nearly 8 percent and WTI by 7 percent — after Iran’s “surprise attack” on US forces in the Middle East ended several days of calm.

Thirty-nine vessels passed through Bab al-Mandab on Tuesday, while only a few transited the Strait of Hormuz, Reuters reported, citing preliminary shipping data.

Red Sea traffic has been disrupted off Yemen’s coast since the Iranian-backed Houthis announced a blockade on Saudi oil tankers.

The US began strikes against Iran early on Thursday after the Iranian attacks, US Central Command said in a social media post.

It said US forces continued to blockade Iranian ports, with 20 commercial vessels redirected, two disabled and two boarded.

Nearly a fifth of global oil and gas flowed through the Strait of Hormuz before the start of the conflict.

President Donald Trump said on Wednesday that US forces would retaliate and were “going to hit them (Iran) very hard” following Iran’s “surprise attack” on US bases in the Middle East.

Iran has rejected Oman’s proposal to jointly manage the Strait of Hormuz and introduce a voluntary transit fee for commercial shipping.

The Omani proposal envisaged a voluntary contribution from vessels transiting the strait, modelled on the Malacca Strait Cooperative Mechanism, which has been active since 2007.

Tehran reiterated that no vessels would use the Strait of Hormuz without authorisation from its naval forces, Tasnim News Agency reported, quoting an Iranian army official.

The Middle East conflict weighed on Saudi Arabia’s benchmark index, which fell 1.3 percent on Wednesday.

Dubai and Abu Dhabi closed flat.