Crude Slips as Mideast Diplomacy Tempers Supply Jitters

Key Moments

Brent crude traded at $114.47 a barrel and WTI at $101.65, both giving back part of the previous session’s gains.
Prospects for renewed peace talks and Qatari-led mediation efforts offset worries over escalating attacks involving Yemen’s Houthis.
Russian refinery runs rebounded by 350 kbd to 4 mbd, while U.S. crude inventories fell and gasoline stocks climbed.

Market Overview

Oil prices moved lower on Thursday, retracing some of the prior session’s advance as signs of possible diplomatic progress eased traders’ focus on supply risks linked to intensifying conflict in the Middle East.

Contract	Price	Move	Percent Change	Time (GMT)
Brent crude futures	$114.47 per barrel	– $0.85	– 0.7%	0720
WTI crude futures	$101.65 per barrel	– $1.13	– 1.1%	0720

On Wednesday, Brent had climbed 1.3% while U.S. West Texas Intermediate (WTI) crude futures advanced 3%.

Diplomatic Moves and Peace Talk Prospects

According to a Wall Street Journal report cited by U.S. officials and people familiar with the matter, U.S. Vice President JD Vance sought to revive peace negotiations by sending a letter to Iranian Security Council chief Mohsen Rezaei.

“Selling pressure is prevailing amid expectations that peace talks may resume,” said Yuki Takashima, an economist at Nomura Securities. “However, the decline remains limited.”

The limited downside in prices was linked to ongoing concerns that hostilities could intensify, particularly amid fears that the United States may launch an attack on Iran following its midterm elections set for November 3.

Escalating Tensions Involving Yemen’s Houthis

The Saudi-led coalition fighting Yemen’s Houthis said it destroyed a ballistic missile launched toward Saudi Arabia’s eastern region early on Thursday, as clashes between the parties showed no signs of easing.

Yemeni government forces said the Houthis attacked Aden airport on Wednesday. That strike followed the group’s claim a day earlier that it had hit Saudi Arabia’s largest oil refinery with a missile, escalating its actions against what is described as the world’s second-largest crude producer after the United States.

Saudi authorities did not immediately confirm the reported attack on the 550,000-barrel-per-day refinery.

Qatari Mediation and Iran’s Position

An official briefed on negotiations said Qatari intermediaries submitted a new draft proposal to Iran aimed at ending the war with the United States and Israel. However, a senior Iranian official rejected the move, describing it as a set of unacceptable ideas that did not amount to a formal offer.

Iran’s foreign minister said on Wednesday that Tehran continued to allow room for diplomacy and indicated that its seven-day plan could be completed in less than a week if adopted.

Russian Output Expectations

Sentiment was further pressured by expectations that crude and diesel production from Russia could rise.

“Since the October 15 strike on the Ryazan refinery, there have been no further confirmed attacks on Russian refining infrastructure,” JPMorgan analysts said in a note last night. “The silence has allowed Russian refinery runs to rebound by 350 kbd last week to 4 mbd.”

The analysts added: “Higher runs would also allow Russia to lift crude production by a broadly comparable amount, reversing part of the recent decline that pushed output to 8.4 mbd—its lowest level since 2003 … (but) higher crude production would not necessarily translate into higher crude exports.”

U.S. Inventory Data

U.S. inventory flows provided another focal point for traders. The U.S. Energy Information Administration reported on Wednesday that energy firms withdrew 1.9 million barrels of crude from storage in the week ended October 23. Analysts polled by Reuters had expected a build of 15,000 barrels.

In contrast, gasoline stocks moved sharply higher, rising by 3.9 million barrels compared with expectations for a draw of 0.9 million barrels.