Tokyo/Singapore — Oil prices fell more than $1 per barrel on Thursday, November 12, 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, Reuters reported. Brent futures were down $1.47, or 1.58%, to $91.29 a barrel by 0426 GMT, and US West Texas Intermediate crude futures slipped $1.24, or 1.43%, to $85.29.
Source: Reuters
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 — the rebound this desk reported on Wednesday, when Hormuz shipping attacks blunted Iran truce hopes. Read: Oil Prices Rebound From Two-Month Lows as Hormuz Shipping Attacks Blunt Iran Truce Hopes
“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.
On the Ukraine track, 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.
On the Iran track, 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. Higher output from the world's biggest crude exporter means more supply reaching the market even while the strait — the route for a large share of Gulf oil, including supplies bound for India — remains disrupted.
US crude stocks rose by 9 million barrels in the latest week — yaani 90 lakh barrels — 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.
What happens next for prices depends on two clocks: the EIA's official inventory numbers later on Thursday, and whether the Abu Dhabi prisoner-exchange agreement and the US-China summit next week keep the peace-talk hopes alive. With Brent still above $91 and Hormuz shipping still disrupted, traders told Reuters the downside is cushioned — but every verified step towards either war ending takes more of the war premium out of crude, which matters directly for fuel prices, freight costs and remittance values for Punjabi and Indian workers and truckers across the Gulf and Canada.