Oil prices fell sharply on Thursday, driven by optimism surrounding peace talks in the Middle East and between Russia and Ukraine. Brent futures dropped $1.14, or 1.2%, to $91.62 a barrel, while US West Texas Intermediate (WTI) crude futures declined $1.04, or 1.2%, to $85.49. The declines came after a brief rebound on Wednesday, when Brent rose about 1.4% and WTI gained 0.6% following two-month lows.
Analysts attributed the drop to expectations of progress in peace negotiations. Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment, noted that markets were reacting to behind-the-scenes efforts to secure a ceasefire between Russia and Ukraine, as well as hopes that the Iran war would not escalate ahead of the upcoming US-China summit. However, Kikukawa cautioned that uncertainty around the Strait of Hormuz could prevent a significant market collapse.
Recent peace talks in Abu Dhabi between Russian and Ukrainian negotiators resulted in a major prisoner exchange, though differences on key issues like territory remain. Ukrainian President Volodymyr Zelenskiy expressed hope for concrete results in resolving the war this year. Meanwhile, Iran's security chief Mohsen Rezaei warned that any attempt to remove enriched nuclear material from the country would have consequences, following US statements that nuclear issues must be part of initial negotiations.
OPEC+ crude oil production surged in October, led by Saudi Arabia, despite disruptions in the Hormuz Strait. Additionally, US crude stocks rose by 9 million barrels in the latest week, according to market sources citing data from the American Petroleum Institute. Official data from the US Energy Information Administration is expected later on Thursday, delayed due to a national holiday.