Oil prices pared gains from the previous session on Thursday as investors balanced emerging diplomatic signals with ongoing security concerns across the Middle East.
By 0132 GMT, Brent crude futures were trading at $114.50 a barrel, down $0.82 or 0.7%. US West Texas Intermediate (WTI) futures fell $1.04, or 1.0%, to $101.74. Both benchmarks had advanced the day before, with Brent up 1.3% and WTI rising 3% on Wednesday.
Market sentiment softened after reports that US Vice President JD Vance had written to Iranian Security Council chief Mohsen Rezaei in an effort to revive peace negotiations, according to accounts cited by US officials and individuals familiar with the matter. Some traders interpreted the outreach as reducing the immediate probability of a broader supply shock.
"Selling pressure is prevailing amid expectations that peace talks may resume," said Yuki Takashima, an economist at Nomura Securities. He added that the scope of the decline was limited, reflecting continued exposure to supply-side risks.
Those risks are tangible. The Saudi-led coalition said it destroyed a ballistic missile fired by Yemen’s Houthi movement toward the kingdom’s eastern region early on Thursday, a sign that hostilities remain active. Separately, Yemeni government forces reported that the Houthis struck Aden airport on Wednesday. The sequence of attacks followed the group’s claim that it had targeted Saudi Arabia’s largest oil refinery with a missile, amplifying concerns about attacks on a major crude producer.
Saudi authorities did not immediately confirm whether a strike had hit the 550,000-barrel-per-day facility.
Diplomatic channels remain engaged. Qatari mediators reportedly presented Iran with a new draft proposal intended to end the conflict involving the US and Israel, according to an official briefed on the talks. A senior Iranian official, however, dismissed the proposals as unacceptable ideas that did not amount to a real offer. Iran’s foreign minister said on Wednesday that Tehran continued to give diplomacy a chance and noted that a seven-day plan under discussion could be completed in less than a week if adopted.
Traders also weighed the possibility of heightened US military action after the upcoming mid-term elections set for November 3, a factor that underpins some of the market’s underlying risk premium.
On the supply-data front, the US Energy Information Administration reported that energy firms withdrew 1.9 million barrels of crude from storage during the week ended October 23. That contrasted with analysts' expectations in a Reuters poll, which had forecast a 15,000-barrel build. Gasoline inventories, meanwhile, rose by 3.9 million barrels against analysts' expectations for a 0.9 million-barrel draw.
Market participants said the interplay between diplomatic developments and persistent hostilities will likely continue to dictate price direction in the near term, with crude benchmarks sensitive to both inventory flows and geopolitical headlines.