Brent falls 0.7% to $114.50 on hopes of resuming Iran talks
Key Facts
Oil fell in early trading on Thursday, October 29, with Brent crude down 82 cents, or 0.7%, to $114.50 a barrel, and West Texas Intermediate down $1.04, or 1.0%, to $101.74 by 01:32 GMT. A Reuters report published via MarketScreener attributed the move to hopes of resuming peace talks, which eased the impact of renewed concerns about Middle East supply disruptions as regional conflict escalated. The declines followed gains of 1.3% in Brent and 3% in WTI in Wednesday's session. EL7 closing data showed Brent ended Wednesday at $115.32, versus $110.27 on Thursday, while WTI closed at $102.78 and then $101.41. The price moves reflect traders weighing the possibility of a return to diplomacy against supply risks that kept crude's decline limited.
Against the backdrop of diplomatic optimism, Axios reported that U.S. Vice President J.D. Vance sent a message to Iranian Supreme National Security Council chief Mohsen Rezaei seeking to resume peace negotiations. A U.S. official said the message stressed that any negotiations to avert U.S. military strikes should include the nuclear issue. The message puts the nuclear issue at the heart of any potential negotiating track, according to the coverage's account of the official's remarks. But a resumption of talks faces unresolved Iranian demands. Axios reported that Tehran is calling for the lifting of the U.S. naval blockade, the release of frozen funds and permission to sell oil. These demands show the range of issues on the table beyond the nuclear issue, making a return to talks dependent on narrowing differences between the two sides.
Supply concerns were reinforced by military activity in the region. Reuters reported that the Houthis attacked Aden airport on Wednesday and said on Tuesday they had targeted Saudi Arabia's largest oil refinery with a missile. Saudi authorities did not immediately confirm the attack on the facility. In another development, the Saudi-led coalition said it destroyed a ballistic missile launched by the Houthis toward the kingdom's Eastern Province early on Thursday. Reuters reported that concerns over an escalation in Houthi attacks and the possibility of the United States resuming an attack on Iran after the midterm elections limited oil's decline. Supply disruption risks therefore remained in play alongside investor bets on a resumption of talks.
U.S. Energy Information Administration data presented a mixed picture of inventories for the week ended October 23. Commercial crude inventories, excluding the strategic reserve, fell to 410.625 million barrels from 412.517 million the previous week. The agency said companies drew 1.9 million barrels of crude during the week, while a Reuters poll had expected an increase of 15 thousand barrels. By contrast, gasoline inventories rose 3.9 million barrels, against forecasts for a decline of 900 thousand barrels. The report thus combined a draw in crude stocks with a larger-than-expected build in gasoline inventories. It was released on October 28, with the next weekly report scheduled for November 4.
On supply outside the Middle East, Reuters quoted JPMorgan analysts as saying Russian refinery runs rose by 350 thousand barrels per day to 4 million barrels per day in the previous week. The analysts said the recovery was enabled by the absence of confirmed new attacks on Russian refining facilities since the October 15 strike on the Ryazan refinery. On the negotiating track, an official familiar with the talks said Qatari mediators had presented Iran with a new draft deal to end the war with the United States and Israel. But a senior Iranian official described the ideas as unacceptable and falling short of an offer. Iran's Foreign Ministry said Tehran was still giving diplomacy a chance and indicated it could complete its seven-day plan in less than a week if adopted. These developments, along with the next inventory report on November 4, are near-term milestones for tracking the balance of supply risks and the course of negotiations.