Oil falls as traders weigh Iran diplomacy against renewed strike risks

 Oil prices fell on Thursday as investors assessed fresh diplomatic efforts to contain the conflict in the Middle East, although concerns about renewed U.S. military strikes on Iran and attacks on Saudi energy infrastructure continued to underpin prices near six-month highs.

As of 01:56 ET (05:56 GMT), Brent Oil Futures expiring in December fell 1.4% to $113.73 per barrel, while West Texas Intermediate (WTI) crude futures slipped 1.6% to $101.19 per barrel.

Both contracts had risen in the previous session after Yemen’s Iran-aligned Houthi movement said it had attacked Saudi Arabia’s largest oil refinery.

The market remained caught between hopes for a diplomatic breakthrough and fears that a renewed escalation could further disrupt oil flows through the Strait of Hormuz, a critical waterway for global crude shipments.

The Wall Street Journal reported that U.S. Vice President JD Vance had reached out to Mohsen Rezaei, secretary of Iran’s top security body, in a move that could help establish a channel for negotiations.

Meanwhile, U.S. President Donald Trump told Axios on Wednesday that negotiations were taking place through mediators, but stressed that he did not know whether they would produce results.

Qatari mediators have presented Tehran with a new draft proposal aimed at ending the conflict. However, an Iranian official described the ideas as unacceptable, Reuters reported.

Saudi Arabia, Turkey and Pakistan have also held talks with Iranian officials in Tehran this week.

Trump has raised the prospect of renewed military action against Iran after the Nov. 3 midterm elections, while Washington has warned regional allies to prepare for possible strikes and Iranian retaliation against energy facilities.

The risk of further attacks has become a key driver of oil prices, with the conflict threatening both production facilities and shipping routes. Prolonged disruptions to traffic through the Strait of Hormuz could sharply tighten global supply, while attacks on Saudi infrastructure could limit the kingdom’s ability to export crude.

U.S. inventory data provided some additional support. Commercial crude stocks fell by 1.9 million barrels to 410.6 million barrels in the week ended Oct. 23, according to the Energy Information Administration, compared with analysts’ expectations for a small increase.

However, the inventory report offered a mixed picture of fuel demand. Gasoline stocks rose by 3.9 million barrels, defying expectations for a decline, while distillate inventories, which include diesel and heating oil, fell by 1.5 million barrels.