Oil prices swung on Thursday as investors weighed mixed signals on diplomatic efforts to end the Iran war against recovering Middle East oil flows. Saudi output rose, and US industry data showed an unexpected inventory build.
West Texas Intermediate crude futures fell 0.5% to $86.15 a barrel on Thursday. Brent futures dropped 0.4% to $92.42 a barrel by 04:34 ET (09:34 GMT). Investors were weighing mixed messaging on diplomacy against improved oil flows out of the region.
Brent, the global benchmark, has surged by more than 50% so far this year but has fallen sharply in recent days.
Diplomacy hopes and Saudi output rise
Hopes have grown that a Democratic victory in the US midterm elections will bring progress toward peace in the Middle East, while shipping data indicates that supplies out of the region are recovering. President Donald Trump has said he does not believe more strikes on Iran will be necessary, and The Wall Street Journal reported that Vice President JD Vance is considering in-person talks with Iranian security official Mohsen Rezaei.
Supply is also rising. Saudi Arabia told the Organization of the Petroleum Exporting Countries that its output climbed by 26% in October to 10.56 million barrels per day. Riyadh has used its east-west pipeline to divert some shipments away from the Strait of Hormuz, while US naval security has helped move oil through the strait.
Obstacles remain in Hormuz and in talks
Still, the US and Iran remain at odds over key issues, including an American naval blockade of Iranian ports and frozen assets. Rezaei has also suggested that no enriched uranium will be allowed to leave Iran. Meanwhile, ongoing tanker attacks in Hormuz keep alive the prospect of future disruptions in a waterway that hosted roughly a fifth of the world's oil and liquefied natural gas flows before the war began in late February.
ING analysts noted that exports still rely on alternative routes around Hormuz. In a research note, they said: "We expect volatility to remain elevated".
Separately, US industry data showed an unexpected 9-million barrel build in inventories over the past week. Official inventory figures are due later on Thursday.
Source: Investing.com
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