Brent falls 0.7% to $114.50 as markets await resumption of U.S.-Iran talks
Key Facts
Brent futures fell 82 cents, or 0.7%, to $114.50 a barrel, while West Texas Intermediate crude futures dropped $1.04, or 1.0%, to $101.74 at 01:32 GMT on October 29. The declines followed gains of 1.3% for Brent and 3% for WTI in Wednesday’s session. EL7 closing data show Brent ended October 28 at $115.32, then closed at $110.92 on October 29; WTI closed at $102.78 and then $101.96 on the two days, respectively. Reuters attributed the decline to hopes for peace talks easing the impact of renewed concerns about Middle East supply disruptions as the regional conflict escalated. “Selling pressure is prevailing amid expectations that peace talks may resume,” said Yuki Takashima, an economist at Nomura, adding that “the decline remains limited.”
The possibility of diplomatic contact between Washington and Tehran has revived interest in negotiations. Axios reported that U.S. Vice President JD Vance sent a message to Iranian national security official Mohsen Rezaei to explore resuming talks. Axios quoted a U.S. official as saying that any negotiations to avert U.S. military strikes “require discussion of the nuclear issue.” Washington is insisting on the resumption of nuclear negotiations before easing sanctions, according to the report. Iran’s demands, meanwhile, include lifting the U.S. naval blockade, releasing frozen funds and allowing oil sales. These disputes put the nuclear issue, sanctions and restrictions on oil exports among the matters facing any renewed negotiating track.
But signs of de-escalation coincided with developments that kept supply risks at the forefront of trading. Yemen’s government forces said the Houthis attacked Aden airport on Wednesday, after the Houthis said on Tuesday they had targeted Saudi Arabia’s largest oil refinery with a missile. Saudi authorities did not immediately confirm a strike on the facility, which has production capacity of 550,000 barrels a day, according to Reuters. In a separate development, the Saudi-led coalition said it destroyed a ballistic missile launched by the Houthis toward the kingdom’s Eastern Province early Thursday. Oil’s rise on October 28 had come amid concerns about supply disruptions following Houthi attacks on Saudi Arabia, according to a Reuters report. The report also linked concerns to the possibility that the United States could resume an attack on Iran after the midterm elections scheduled for November 3.
U.S. inventory data showed diverging trends in crude and refined fuels in the week ended October 23. Energy companies drew 1.9 million barrels from crude inventories, while a Reuters poll had expected an increase of 15,000 barrels. By contrast, gasoline inventories rose 3.9 million barrels, despite analysts’ expectations for a 0.9 million-barrel decline. The figures mean the crude draw was contrary to expectations, while gasoline inventories moved in the opposite direction to estimates. U.S. domestic crude production also reached 13.992 million barrels a day during the same week, and refineries used 92.8% of their operating capacity, according to the U.S. Energy Information Administration. These indicators offer a mixed picture of U.S. supply, with a crude draw and a rise in gasoline alongside higher domestic production.
On Russian supply, Reuters cited JPMorgan analysts as saying refinery runs rose to 4 million barrels a day in the previous week, as activity recovered after the October 15 strike on the Ryazan refinery. The analysts said the absence of confirmation of new attacks on refining facilities since that strike had allowed the recovery. Higher refinery runs could allow crude production to increase by a similar amount, the analysts said, but do not automatically mean higher crude exports. On the diplomatic front, an official familiar with the negotiations said Qatari mediators had presented Iran with a new draft to end the war with the United States and Israel. A senior Iranian official described the ideas as unacceptable and falling short of an offer, while Iran’s foreign minister said Tehran was still giving diplomacy a chance. The minister indicated that Iran’s seven-day plan could be completed in less than a week if adopted, while the next U.S. weekly petroleum status report is due on November 12, according to the EIA schedule.