Oil recovers from early drop as Middle East tensions offset rising output

Commodities News

Oil recovers from early drop as Middle East tensions offset rising output

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Oil (WTI) Brent Crude

Oil prices rose on Thursday after recovering from early losses, as Middle East tensions offset pressure from rising regional crude output. US-Iran talks remain deadlocked, and Russian and Ukrainian negotiators agreed to a prisoner exchange.

Oil prices rose on Thursday after recovering from earlier losses, as persistent geopolitical tensions in the Middle East offset pressure from rising regional crude output. Both contracts had fallen more than $1 per barrel in early Asian trading.

Brent futures advanced 45 cents, or 0.49%, to $93.21 a barrel by 0732 GMT. US West Texas Intermediate crude climbed 27 cents, or 0.31%, to $86.80.

Output recovers while talks stall

Ole Hansen, head of commodity strategy at Saxo Bank, described the situation as a "no war, no peace" situation that allows Middle East oil production to recover despite the deadlock in US-Iran negotiations. Hansen said returned Middle East production is pressuring crude prices, though persistent geopolitical risks are likely to cap further downside.

Iranian security chief Mohsen Rezaei said in televised remarks that Iran will not allow even a single particle of enriched nuclear material to leave the country. Washington has said nuclear issues must be part of any initial negotiations aimed at ending the eight-month-old war.

Hormuz risks and supply data

The comments highlighted obstacles to a broader agreement that could ease tensions around the Strait of Hormuz, a key route for global oil shipments. In the waterway, tankers are still ablaze, oil spills are washing ashore, and drones and missiles have hit infrastructure across the region.

OPEC+ crude production rose in October, driven by higher Saudi Arabian output despite ongoing shipping disruptions through the Strait of Hormuz. Meanwhile, US crude stocks rose by 9 million barrels in the latest week, market sources said, citing American Petroleum Institute data.

Elsewhere, Russian and Ukrainian negotiators agreed to a major prisoner exchange after two days of peace talks in Abu Dhabi, although US mediators said differences remained on other major issues, including territory.

Source: Reuters via Investing.com

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