Oil prices witnessed a decline of more than one dollar during Thursday’s trading, driven by increasing diplomatic hopes aimed at ending the conflict in the Middle East and the ongoing war between Russia and Ukraine.
Brent crude futures recorded a decline of $1.14, or 1.2%, to reach $91.62 per barrel. At the same time, US West Texas Intermediate crude futures fell by $1.04, or by 1.2% as well, settling at $85.49 per barrel. This decline comes after a session that witnessed a slight increase yesterday, Wednesday, by about 1.4% for Brent crude and 0.6% for American crude, after recording their lowest levels in two months in the previous session.
In this context, Hiroyuki Kikukawa, chief analyst at Nissan Securities Investment, explained that the markets are witnessing this decline as a result of expectations that there are diplomatic efforts taking place behind the scenes to reach a ceasefire between Russia and Ukraine, as well as the exclusion of escalation of the war with Iran ahead of the expected summit between the United States and China next week. Kikukawa added, “Given the uncertainty surrounding the Strait of Hormuz, it is unlikely that the markets will witness a significant decline.”
On the diplomatic level, Russian and Ukrainian negotiators agreed on a large-scale prisoner exchange, during two-day talks in Abu Dhabi that concluded yesterday, Wednesday. While the American mediators confirmed the continuation of disagreements over other major issues, most notably the land issue. For his part, Ukrainian President Volodymyr Zelensky expressed Kiev’s hope to achieve tangible results to end the war during the current year.
In the Iranian file, Secretary of the Iranian Supreme National Security Council, Mohsen Rezaei, stated that Tehran will not allow “even a single atom” of enriched nuclear material to leave its territory, threatening consequences if the United States launches new strikes. On the other hand, Washington stressed the need for nuclear issues to form part of any initial negotiations with Iran aimed at ending the war that has been ongoing for 8 months, with American officials reducing the need to launch further military strikes.
In terms of supplies, crude oil production by OPEC+ countries jumped during last October, driven by a sharp increase in Saudi production, and despite the continued disruption of shipments through the Strait of Hormuz. In the American context, market sources indicated – based on data from the American Petroleum Institute – that US crude inventories rose by 9 million barrels during the past week, awaiting the issuance of official data from the US Energy Information Administration in record time today, Thursday, after it was postponed for one day due to a national holiday in the United States yesterday, Wednesday.
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