Oil Prices Fall More Than $1 as Middle East Tensions Ease and Supply Concerns Grow
Brent drops 1.58% to $91.29 a barrel while WTI falls 1.43% amid rising OPEC+ output and higher US crude inventories
Oil Prices decline as easing geopolitical concerns and rising global supply pressure crude markets.
Oil prices fell by more than $1 a barrel on Thursday as easing concerns over a wider Middle East conflict reduced the geopolitical risk premium in crude markets.
Meanwhile, rising production from OPEC+ and increasing US crude inventories added to concerns about a potential supply surplus.
Brent crude futures declined $1.47, or 1.58%, to $91.29 a barrel. US West Texas Intermediate (WTI) crude futures fell $1.24, or 1.43%, to $85.29.
The declines reversed Wednesday’s gains, when Brent rose 1.4% and WTI advanced 0.6%. Both benchmarks had reached two-month lows on Tuesday.
Diplomatic Efforts Weigh on Oil Prices
Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, said markets were responding to expectations of diplomatic progress.
He said behind-the-scenes efforts could help secure a ceasefire between Russia and Ukraine. Investors also appeared to expect limited escalation in the Iran conflict ahead of next week’s US-China summit.
However, Kikukawa warned that uncertainty surrounding the Strait of Hormuz could prevent a significant decline in oil prices.
Russian and Ukrainian negotiators agreed to a major prisoner exchange after two days of peace talks in Abu Dhabi, which concluded on Wednesday.
However, US mediators said major differences remained, particularly over territorial issues.
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Ukrainian President Volodymyr Zelenskiy said Kyiv hoped to achieve concrete results towards resolving the war this year.
Iran Tensions Keep Market Risks in Focus
Meanwhile, Iranian security chief Mohsen Rezaei warned that Iran would not allow any enriched nuclear material to leave the country.
He also warned of consequences if the United States launched further military strikes against Iran.
Washington has maintained that nuclear issues must feature in initial negotiations aimed at ending the eight-month-old conflict. However, US officials have played down the need for additional military action.
Uncertainty over the Strait of Hormuz also remains a major concern for oil traders because the waterway is a critical route for global energy shipments.
Rising OPEC+ Output and US Stocks Add Pressure
Supply concerns also contributed to Thursday’s price decline.
OPEC+ crude production increased in October, driven by higher Saudi Arabian output despite continuing shipping disruptions through the Strait of Hormuz.
In the United States, crude oil inventories increased by 9 million barrels during the latest week, according to data from the American Petroleum Institute (API), cited by market sources.
The US Energy Information Administration (EIA) was scheduled to release its official inventory figures on Thursday. The agency delayed the report by one day because of Wednesday’s US national holiday.
Investors are watching the figures closely for further indications of supply and demand trends in the world’s largest oil-consuming economy.
