Oil prices fell as expectations grew that peace talks might de-escalate conflicts
Concerns persist that escalating regional conflicts in the Middle East could lead to supply disruptions. However, as hopes for peace talks helped to somewhat alleviate these anxieties, oil prices declined on Thursday, surrendering some of the gains made the previous day.
As of 07:20 GMT, the price of a barrel of Brent crude fell by 85 cents (0.7%) to $114.47. Meanwhile, the price of a barrel of U.S. West Texas Intermediate (WTI) crude dropped by $1.13 (1.1%) to $101.65.
On Wednesday, Brent crude had gained 1.3%, while WTI had risen by 3%.
It is reported that the U.S. has sent a letter to Mohsen Rezaei, a senior Iranian official, in an attempt to revive peace negotiations. The prospect that these talks might resume has triggered selling pressure, though this has also served to limit the extent of the price decline.
Underlying this situation are fears surrounding the intensification of attacks by the Houthis, as well as concerns that the U.S. might launch an offensive against Iran following the midterm elections on November 3.
There are no signs of a de-escalation in the conflict between the Houthi movement in Yemen and the Saudi-led coalition fighting against them.
These attacks highlight an escalation by the Houthis against Saudi Arabia—the world’s second-largest crude oil producer, trailing only the United States.
According to an official familiar with the negotiations, Qatari mediators have presented Iran with a new draft agreement aimed at ending the conflict involving the U.S. and Israel; however, a high-ranking Iranian official dismissed the proposals as "unacceptable," stating that they did not constitute a viable offer.
In a statement on Wednesday, Iran’s Foreign Minister indicated that Tehran remains open to diplomacy, suggesting that if a proposed seven-day plan were accepted, it could be implemented in less than a week.
Expectations of an increase in Russian crude oil and diesel production have exerted further pressure on market sentiment and prices.
Since the attack on the Ryazan refinery on October 15, there have been no further confirmed strikes on Russia’s refining infrastructure. This period of relative calm has allowed Russian refinery operations to recover, rising by 350,000 barrels per day last week to reach a total of 4 million barrels per day.
This uptick in refining activity could also enable Russia to increase its crude oil production, potentially offsetting some of the recent decline that had pushed output down to 8.4 million barrels per day—the lowest level since 2003. It remains unclear, however, to what extent any increase in Russian crude oil production will be reflected in its crude oil exports.
On Wednesday, the U.S. Energy Information Administration (EIA) reported that energy companies drew 1.9 million barrels of crude oil from their inventories during the week ending October 23—a result that contrasts with analysts' forecasts, which had anticipated an increase of 15,000 barrels.
In contrast, gasoline inventories rose by 3.9 million barrels, defying analysts' expectations of a 0.9 million-barrel decline.
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