Global oil benchmarks weakened on Thursday as renewed hopes for progress in diplomatic talks covering the Middle East and the Russia-Ukraine conflict pressured crude prices. By 0141 GMT, Brent futures had fallen $1.14, or 1.2%, to $91.62 a barrel, while US West Texas Intermediate (WTI) crude futures were down $1.04, or 1.2%, at $85.49.
The move lower followed a rebound on Wednesday, when Brent climbed about 1.4% and WTI rose roughly 0.6% after both contracts earlier hit two-month lows. Traders said the recent declines and the subsequent bounce reflected shifting expectations about the trajectory of geopolitical tensions and the balance between supply and demand.
Diplomatic developments and market commentary
Market sentiment was influenced by expectations of diplomatic activity aimed at reducing active hostilities. "Markets are falling on expectations that behind-the-scenes efforts are underway to secure a ceasefire between Russia and Ukraine and that it is unlikely the Iran war will escalate ahead of the US-China summit next week," said Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment.
Kikukawa added a cautionary note on supply risks: "However, given the uncertainty surrounding the Strait of Hormuz, the markets are unlikely to suffer a significant collapse."
At two days of talks in Abu Dhabi that concluded on Wednesday, Russian and Ukrainian negotiators agreed to a major prisoner exchange. US mediators cautioned that significant differences remained on other central issues, including territory. Ukrainian President Volodymyr Zelenskiy said Kyiv hoped to secure concrete results on resolving the war this year.
Iran's stance and US negotiating position
Iranian security chief Mohsen Rezaei, speaking on television, asserted that Iran "will not allow even a single particle of enriched nuclear material to leave the country and there will be consequences if US launches new strikes."
Washington has stated that nuclear issues should be part of any initial negotiations aimed at ending the eight-month-old war, while US officials have played down the need for additional military strikes, according to market reporting.
Supply, inventories and data flow
On the supply side, OPEC+ crude oil output jumped in October, driven by a sharp increase in production from Saudi Arabia, even as shipments through the Hormuz Strait continued to face disruption. Meanwhile, market sources cited American Petroleum Institute data indicating US crude stocks rose by 9 million barrels in the latest week.
Official inventory figures from the US Energy Information Administration were scheduled for release on Thursday, with that publication delayed by one day because of a US national holiday on Wednesday.
Outlook
Traders are weighing diplomatic developments that could ease demand-side risk premiums against supply-side volatility tied to shipments through the Strait of Hormuz and recent shifts in production. The combination of these factors has left markets sensitive to news flow, with prices moving on both talks-related optimism and signs of increased output or rising inventories.