International oil prices declined on Thursday as reports of renewed diplomatic efforts involving Iran and the United States affected market expectations, while military activity in the Middle East continued to raise questions about the security of energy supplies.
Brent crude futures fell $1.27, or 1.1%, to $114.05 per barrel by 09:22 GMT. US West Texas Intermediate (WTI) crude futures declined $1.51, equivalent to 1.5%, to $101.27 per barrel.
The movements followed gains in the previous session, when Brent rose 1.3% and WTI advanced 3%.
Oil Benchmarks Reverse Part of Wednesday’s Increase
Crude oil futures traded lower on Thursday following reports of diplomatic initiatives intended to reduce the conflict involving Iran, the United States and Israel.
Brent declined to $114.05 per barrel, while WTI fell to $101.27.
The respective decreases of 1.1% and 1.5% partially reversed Wednesday’s increases.
Oil traders were weighing the possibility of progress in negotiations against reports of attacks affecting regional energy infrastructure and shipping.
Developments in Russian refining operations and US petroleum inventories also contributed to the market’s assessment of supply conditions.
JD Vance Reportedly Sends Letter to Iranian Security Official
The Wall Street Journal reported on Wednesday that US Vice President JD Vance had contacted Mohsen Rezaei, the head of Iran’s Security Council, through a letter intended to restart peace negotiations.
The report cited US officials and people familiar with the communication.
UBS analyst Giovanni Staunovo attributed the decline in oil prices to the latest diplomatic activity.
“Oil prices are under pressure today amid renewed diplomatic efforts to de-escalate the conflict in the Middle East,” Staunovo said.
The reported contact came as regional mediators continued efforts to establish terms for an agreement.
Qatar Presents New Proposal as Iranian Official Rejects Terms
Mediators from Qatar submitted a revised draft agreement to Iran aimed at ending the conflict involving Tehran, Washington and Israel.
The development was reported by an official briefed on the negotiations.
A senior Iranian official subsequently rejected the proposal, indicating that its contents were unacceptable and did not amount to a formal offer.
Separately, Iran’s foreign minister said on Wednesday that the country continued to give diplomatic negotiations an opportunity to succeed.
The minister also indicated that Tehran’s seven-day plan could potentially be completed in less than seven days if the proposal were adopted.
The statements provided differing indications concerning the progress of the diplomatic process.
Saudi Coalition Reports Missile Interception
Military activity involving Yemen’s Houthi movement continued during the period.
The Saudi-led coalition fighting the Houthis announced on Thursday that it had destroyed a ballistic missile launched toward Saudi Arabia’s eastern region.
The coalition’s statement followed reports of additional attacks involving the group.
Yemeni government forces said the Houthis had attacked Aden airport on Wednesday.
A day earlier, the Houthis claimed responsibility for a missile strike against Saudi Arabia’s largest oil refinery.
The incidents maintained attention on the potential effects of regional hostilities on energy production and transportation.
Market participants were also considering concerns about possible US military action against Iran after the November 3 midterm elections.
Three Tankers Reportedly Strike Mines Near Hormuz
Iran’s Revolutionary Guards said three oil tankers had encountered sea mines while travelling along an unauthorised route south of the Strait of Hormuz.
According to the Iranian statement, the vessels experienced explosions and fires during incidents occurring over the preceding 24 hours.
The reported events added to concerns surrounding maritime operations near one of the principal shipping routes for Persian Gulf oil exports.
The Strait of Hormuz is an important passage for international crude shipments, making developments affecting vessel movements relevant to oil market supply expectations.
Russian Refinery Throughput Rises to 4 Million Barrels a Day
Analysts at JPMorgan reported an increase in Russian refinery activity following the absence of further confirmed strikes on the country’s refining infrastructure.
In a note issued late Wednesday, they stated:
“Since the October 15 strike on the Ryazan refinery, there have been no further confirmed attacks on Russian refining infrastructure,”
The analysts continued:
“The silence has allowed Russian refinery runs to rebound by 350,000 barrels a day last week, to 4 million barrels a day.”
The reported increase in processing activity followed the October 15 attack on the Ryazan facility.
Expectations of additional crude and diesel supply from Russia contributed to the factors limiting oil price increases during Thursday’s trading.
US Crude Stocks Fall Against Expectations for a Small Build
The US Energy Information Administration reported a reduction in crude oil inventories for the week ended October 23.
Commercial crude stocks declined by 1.9 million barrels.
A Reuters survey of analysts had indicated expectations for an increase of 15,000 barrels.
The difference between the reported inventory change and the forecast provided additional information about US crude market conditions.
However, the agency’s gasoline inventory figures showed an increase rather than a decline.
Gasoline Inventories Rise Despite Forecast Decline
US gasoline stockpiles increased by 3.9 million barrels during the same reporting period.
Analysts surveyed by Reuters had expected gasoline inventories to decrease by approximately 900,000 barrels.
The reported increase therefore exceeded expectations and contrasted with the decline in crude oil stocks.
The inventory figures showed different developments across crude oil and refined petroleum products.
Oil Market Focus Remains on Diplomatic and Supply Developments
Thursday’s decline in Brent and WTI prices occurred against a combination of diplomatic initiatives and continuing military activity in the Middle East.
Reports of renewed contact between the United States and Iran were accompanied by further incidents involving the Houthis and vessels near the Strait of Hormuz.
At the same time, higher Russian refinery throughput and changes in US oil and gasoline inventories contributed to assessments of petroleum supply conditions.
These developments formed the immediate context for the decline in international oil futures.
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