Oil prices fall 2% on hopes of limited Saudi supply disruptions

Sept 18 (Reuters) - Oil prices fell 2% on Friday, extending losses for a third straight session, as easing concerns over Saudi supply disruptions ‌outweighed anxiety about a widening the Middle East conflict.

Brent crude futures fell $2.3, or 2.2%, ‌to $102.53 a barrel by 0636 GMT, while US West Texas Intermediate futures fell $1.85, or 1.8%, to $100.04 a barrel.

Brent prices are on track ​for their first weekly loss in three, down 2%.

Markets largely shrugged off concerns about new threats to supplies even as Saudi Arabia and Yemen's Iran-backed Houthis exchanged fresh strikes across their border on Thursday, expanding the Middle East war front.

Earlier this week, prices climbed to close to four-month highs as sources said crude loadings ‌at Saudi Arabia's Red Sea export ⁠hub of Yanbu had been suspended and Riyadh cancelled some deliveries to Europe after its East-West pipeline was damaged in an attack last week.

However, prices have cooled ⁠off on reports Saudi Arabia was seeking to return about half the capacity of its East-West oil pipeline within days and the nation was offering more crude cargoes to Asian refiners through ship-to-ship transfers off Oman's ​port of ​Sohar.

"Recent efforts to restore Saudi export capacity have reduced ​some of the immediate supply anxiety," said ‌Priyanka Sachdeva, head of market insights at Phillip Nova.

Sources that have spoken to Reuters have given varying estimates of how long it will take to reopen the pipeline and return crude flows to normal.

Oil prices are still up over $100 per barrel as the markets are waiting for evidence of a clear supply improvement, analysts said.

"The key question is whether physical flows can normalise and what could be the ‌timeline. If we see a sustained improvement in Hormuz ​traffic, some of the geopolitical premium can unwind further," Sachdeva ​said.

Transporting oil through the region remains risky, ​however.

Iran's Revolutionary Guards Navy said a Togo-flagged oil tanker was struck while attempting ‌to make an "illegal passage" through the Strait of ​Hormuz on Thursday, Iranian ​state media said early on Friday.

The US and Iran have held no peace talks since an interim agreement reached in June collapsed within weeks. The war will come up for discussion ​at the United Nations General Assembly ‌next week, and an Iranian delegation will be able to attend, according to the ​US State Department.

(Reporting by Sethuraman NR in New Delhi and Arathy Somasekhar in Houston; ​Editing by Sonali Paul, Christian Schmollinger and Tom Hogue)