Oil prices dropped in early Asian trading on Thursday after reports emerged that the U.S. was exploring further diplomatic efforts with Iran to resolve their ongoing conflict. The news halted a brief rebound in crude prices, which had recovered from two-month lows in the previous session amid persistent Middle East tensions.
Brent crude fell 0.3% to $86.25 a barrel by 18:20 ET (23:20 GMT). The Wall Street Journal reported that U.S. Vice President JD Vance was considering in-person talks with a senior Iranian security official, marking a renewed push by Washington to end the war. President Donald Trump reportedly supports Vance's efforts, though discussions remain preliminary.
Despite the diplomatic overtures, the U.S. and Iran remain at odds over critical issues, including the Strait of Hormuz and a naval blockade against Tehran. Iran has continued attacking vessels in the Strait over the past week, while denying any direct talks with the U.S. Washington insists Iran must abandon its nuclear ambitions, while Tehran demands the lifting of the U.S. blockade before further peace talks can proceed.
Adding to market uncertainty, fighting between Saudi Arabia and Yemen’s Iran-backed Houthis has escalated, with the Houthis targeting more Saudi oil infrastructure. Meanwhile, U.S. industry data revealed an unexpected 9 million barrel increase in inventories last week, a trend likely to be confirmed in official data due later on Thursday. Oil prices have declined sharply over the past week following a Democrat victory in the U.S. midterm elections, which raised expectations of increased pressure on Washington to resolve the Iran conflict.