Oil prices dropped on Thursday as renewed efforts to restart U.S.-Iran peace talks eased concerns over potential supply disruptions in the Middle East. Brent crude futures fell 1.23% to $113.9 per barrel, while U.S. West Texas Intermediate (WTI) crude futures slipped 1.42% to $101.32 per barrel.
The decline came after reports that U.S. Vice President JD Vance had reached out to Iranian Security Council chief Mohsen Rezaei to revive peace negotiations, according to the Wall Street Journal. Qatari mediators also proposed a new plan to end the conflict involving Iran, the U.S., and Israel, though a senior Iranian official dismissed the proposals as unacceptable.
Despite the diplomatic efforts, uncertainties persist. Iran's foreign minister stated on X that Tehran remains open to diplomacy, suggesting a possible acceleration of a proposed seven-day peace plan if an agreement is reached. However, investors remain cautious about the threat of Houthi attacks and potential U.S. military action against Iran following the Nov. 3 midterm elections.
José Torres, senior economist at Interactive Brokers, noted that high crude prices are a key driver of above-target inflation. He argued that the Federal Reserve should adopt a patient approach to interest rate hikes, given the risk of weakening employment and credit vulnerabilities. Torres also suggested that a decline in WTI crude prices toward $70 per barrel could strengthen the case for eventual interest-rate cuts.