Oil prices drop on supply surge, fading tensions
Shafaq News
Oil prices fell more than $1 per barrel on Thursday as easing concerns over an escalation of conflict in the Middle East reduced the risk premium in crude markets, while rising OPEC+ output and growing US inventories fed worries about oversupply.
Brent futures were down $1.47, or 1.58%, to $91.29 a barrel by 0426 GMT. US West Texas Intermediate crude futures slipped $1.24, or 1.43%, to $85.29.
The declines reversed Wednesday's gains, when Brent rose 1.4% and WTI added 0.6% after both benchmarks hit two-month lows the previous day.
"Markets are falling on expectations that behind-the-scenes efforts are underway to secure a ceasefire between Russia and Ukraine and that it is unlikely the Iran war will escalate ahead of the US-China summit next week," said Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment, a unit of Nissan Securities.
"However, given the uncertainty surrounding the Strait of Hormuz, the markets are unlikely to suffer a significant collapse," Kikukawa said.
Russian and Ukrainian negotiators agreed to a major prisoner exchange at two days of peace talks in Abu Dhabi that ended on Wednesday, although US mediators said differences remained on other major issues, including territory.
Ukrainian President Volodymyr Zelenskiy said Kyiv hoped to achieve concrete results on resolving the war this year.
Meanwhile, Iran will not allow even a single particle of enriched nuclear material to leave the country and there will be consequences if the US launches new strikes, Iranian security chief Mohsen Rezaei said in televised remarks.
Washington has said nuclear issues must be part of any initial negotiations with Iran aimed at ending the eight-month-old war, while US officials downplayed the need for further military strikes.
Adding to bearish sentiment in oil markets, OPEC+ crude production rose in October, driven by higher Saudi Arabian output despite ongoing shipping disruptions through the Strait of Hormuz.
US crude stocks rose by 9 million barrels in the latest week, market sources said, citing data from the American Petroleum Institute. Official data from the US Energy Information Administration is due on Thursday, delayed a day due to a US national holiday on Wednesday.
(Reuters)
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