NEW YORK: Oil prices declined on Thursday as hopes for renewed peace talks between the United States and Iran eased concerns about crude supplies, despite escalating attacks across the Middle East that threatened regional oil flows.
Brent crude futures fell $1.22, or 1.1%, to $114.10 a barrel by 3:51 a.m. GMT. US West Texas Intermediate (WTI) crude dropped $1.33, or 1.3%, to $101.45 a barrel.
Both benchmarks had risen a day earlier, with Brent gaining 1.3% and WTI climbing 3%.
Hopes for renewed diplomacy weigh on prices
Market sentiment improved following reports that US Vice President JD Vance had sent a letter to Iranian Security Council chief Mohsen Rezaei in an effort to revive peace negotiations. The Wall Street Journal reported the development, citing US officials and people familiar with the matter.
“Selling pressure is prevailing amid expectations that peace talks may resume,” said Yuki Takashima, an economist at Nomura Securities, adding that the decline remained limited.
However, fears of further military escalation continued to support prices. The Houthis intensified attacks in the region, while concerns persisted that the United States could launch another military operation against Iran after the November 3 midterm elections.
Houthi attacks raise concerns over oil infrastructure
The Saudi-led coalition fighting the Houthis said it intercepted and destroyed a ballistic missile fired towards Saudi Arabia’s eastern region early Thursday. Yemeni government forces also reported a Houthi attack on Aden airport on Wednesday.
The incidents followed a Houthi claim that the group had struck Saudi Arabia’s largest oil refinery with a missile. Saudi authorities had not immediately confirmed the reported attack.
The refinery has a processing capacity of 550,000 barrels per day, making any disruption to its operations a potential concern for regional oil supplies.
Qatar presents new proposal to Iran
Diplomatic efforts continued alongside the military tensions. Qatari mediators presented Iran with a new draft proposal intended to end the war involving the United States and Israel, according to an official briefed on the negotiations.
A senior Iranian official, however, dismissed the ideas as unacceptable and said they did not constitute a formal offer.
Iran’s foreign minister said on Wednesday that Tehran was still giving diplomacy a chance. He added that Iran’s seven-day plan could be completed in less than a week if adopted.
Higher Russian refinery activity adds pressure
Expectations of increased Russian crude production and refining activity also weighed on oil prices.
JPMorgan analysts said Russian refinery runs rose by 350,000 barrels per day last week to 4 million barrels per day. The increase followed a period without further confirmed attacks on Russia’s refining infrastructure since October 15.
According to the analysts, higher refinery activity could enable Russia to increase crude production by a similar amount, potentially reversing part of a recent decline that had pushed output to 8.4 million barrels per day — its lowest level since 2003.
However, they cautioned that higher production would not necessarily translate into increased crude exports.
PTA Identifies 326 Cyber Threat Indicators Through Dark Web Monitoring
US crude inventories fall, gasoline stocks rise
US inventory data presented a mixed picture of energy demand.
The Energy Information Administration reported on Wednesday that energy companies withdrew 1.9 million barrels of crude oil from storage during the week ended October 23. Analysts surveyed by Reuters had expected inventories to increase by 15,000 barrels.
Gasoline inventories moved in the opposite direction, rising by 3.9 million barrels despite forecasts for a decline of 900,000 barrels.
The competing signals from diplomacy, military developments, Russian output and US inventories continued to shape market sentiment, leaving oil prices sensitive to further developments in the Middle East.
