Brent drops below $110 as Middle East peace talks ease supply concerns

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Brent drops below $110

Highlights

Brent fell 2.25%, WTI dropped 2.78%.
U.S. and Qatar renewed Iran's peace efforts.
U.S. crude inventories fell 1.9M barrels.

January Brent futures declined 2.25% to $109.15 a barrel, while December West Texas Intermediate (WTI) futures dropped 2.78% to $99.19. Diplomatic initiatives involving Washington, Tehran, and regional mediators had weakened the geopolitical risk premium, Reuters reports.

Diplomatic efforts put pressure on crude prices

U.S. Vice President JD Vance has reportedly sought to restart negotiations with Iran through a letter to Iranian security official Mohsen Rezaei. Qatari mediators have also presented Tehran with a proposed agreement aimed at ending the conflict involving the United States and Israel, although a senior Iranian official rejected the latest proposals as insufficient.

Iran's foreign minister indicated Wednesday that diplomatic efforts remained possible and suggested a proposed seven-day framework could be completed sooner if accepted. The developments encouraged traders to reassess the likelihood of prolonged supply disruptions, reversing part of the previous session's gains.

However, the diplomatic outlook remains uncertain. Neither side has confirmed a breakthrough, and military activity across the region continues to threaten production facilities and transport routes.

Regional attacks keep supply disruptions in focus

The Saudi-led coalition said Thursday it intercepted a ballistic missile launched by Yemen's Iran-aligned Houthis toward eastern Saudi Arabia. The incident followed attacks on Aden Airport and a Houthi claim that the group had struck Saudi Arabia's largest oil refinery.

Shipping risks also remained elevated after Iran's Revolutionary Guards reported that three tankers had struck sea mines near the Strait of Hormuz. The strategic passage handles substantial volumes of international oil shipments, making further disruptions a potential source of renewed price volatility.

Meanwhile, Russian refinery operations have recovered following a period without confirmed new attacks. Refinery processing increased by approximately 350,000 barrels per day last week to 4 million barrels daily, adding to expectations of improving fuel availability.

Inventory data and diplomacy shape the oil outlook

U.S. inventory figures provided mixed signals about underlying demand. The Energy Information Administration reported a 1.9 million-barrel decline in crude inventories for the week ended October 23, compared with expectations for a 15,000-barrel increase.

Gasoline inventories, however, climbed 3.9 million barrels against forecasts for a 900,000-barrel decline, suggesting weaker fuel demand or stronger supply than anticipated.

With Brent trading below $110 and WTI near $100, investors face competing influences from diplomacy, shipping security, and fuel inventories. Any progress toward a ceasefire could reduce the geopolitical premium further, while additional attacks on oil facilities or vessels could quickly reverse Thursday's decline.

We also reported gold approaches $4,000 as investors assess Fed rate outlook.

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