NEW YORK: Oil prices slipped Thursday as hopes for renewed U.S.-Iran peace talks eased supply concerns, even as escalating attacks across the Middle East threatened to disrupt crude flows.
Brent crude futures fell $1.22, or 1.1%, to $114.10 a barrel by 3:51 a.m. GMT, while U.S. West Texas Intermediate crude dropped $1.33, or 1.3%, to $101.45. Both benchmarks had risen Wednesday, with Brent gaining 1.3% and WTI climbing 3%.
Market sentiment improved after reports that U.S. Vice President JD Vance had sent a letter to Iranian Security Council chief Mohsen Rezaei in an effort to revive peace negotiations, according to The Wall Street Journal, which cited U.S. 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. “However, the decline remains limited.”
Fears of further military escalation continued to limit the losses. The Houthis intensified attacks in the region, while concerns persisted that the United States could launch another military operation against Iran after the Nov. 3 midterm elections.
The Saudi-led coalition fighting the Houthis said it intercepted and destroyed a ballistic missile fired toward Saudi Arabia’s eastern region early Thursday. Yemeni government forces also reported a Houthi attack on Aden airport Wednesday.
The latest 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 on the facility, which has a processing capacity of 550,000 barrels per day.
Diplomatic efforts continued alongside the fighting. Qatari mediators presented Iran with a new draft proposal aimed at ending the war involving the United States and Israel, an official briefed on the negotiations said. However, a senior Iranian official dismissed the ideas as unacceptable and said they did not amount to a formal offer.
Iran’s foreign minister said Wednesday that Tehran was still giving diplomacy a chance, adding that its seven-day plan could be completed in less than a week if adopted.
Meanwhile, expectations of higher Russian crude production and refining activity added pressure to oil prices. JPMorgan analysts said Russian refinery runs had increased by 350,000 barrels per day last week to 4 million barrels per day, following a period without further confirmed attacks on the country’s refining infrastructure since Oct. 15.
The analysts said higher refinery activity could allow 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 increased production would not necessarily lead to higher crude exports.
U.S. inventory data offered a mixed picture of demand. The Energy Information Administration reported Wednesday that energy companies withdrew 1.9 million barrels of crude from storage in the week ended Oct. 23, compared with analysts’ expectations for a 15,000-barrel increase, according to a Reuters poll.
Gasoline inventories, however, rose by 3.9 million barrels, defying forecasts for a decline of 900,000 barrels.
