Oil Set for Sharp Weekly Rise

Crude oil fell towards $101 a barrel on Thursday as markets weighed renewed diplomatic efforts to prevent further US military action against Iran. US Vice President JD Vance reportedly contacted Iranian officials, while Foreign Minister Abbas Araghchi said Tehran remained open to diplomacy. President Donald Trump confirmed communication with Iranian authorities, although he described the outreach as focused on medical supplies and acknowledged uncertainty over whether negotiations would succeed. Earlier, reports indicated that US officials advised regional allies to prepare for possible military operations after the November midterm elections. Meanwhile, Europe plans to release 42 million barrels of oil reserves over the next three months, including a substantial volume of diesel, as part of efforts to increase available supply and moderate energy costs.

Crude oil prices fell toward $101 per barrel on Thursday, trimming gains from the previous session as investors assessed renewed diplomatic efforts to prevent further escalation of the Middle East conflict. Reports suggested that US Vice President JD Vance had contacted Iranian national security official Mohsen Rezaei, while President Donald Trump confirmed that negotiations were underway through mediators but acknowledged uncertainty over their outcome. Iranian Foreign Minister Abbas Araghchi also reiterated that Tehran remained open to diplomatic solutions. Despite the pullback, WTI crude has gained more than 14% this month, supported by intensifying clashes involving Saudi Arabia and Iran-backed Houthi forces, alongside continued threats to shipping through the Strait of Hormuz. However, energy flows from the region have since recovered to levels close to those recorded before the war.

Crude oil trimmed gains to settle near $102 a barrel on Wednesday after reaching as high as 103.5 earlier in the session. Escalating Middle East hostilities heightened concerns about supply disruptions. Iran-aligned Houthis attacked Aden airport and claimed a missile strike on Saudi Arabia’s largest oil refinery, which has a capacity of 550,000 barrels per day, although Saudi authorities had not confirmed the reported refinery attack. Also, there are increased fears that the US could resume military operations against Iran after the November 3 midterm elections, potentially intensifying regional instability and threatening oil flows. Meanwhile, Qatar mediators presented Iran with a new draft proposal to end the war involving the US and Israel. However, an Iranian official dismissed the ideas as unacceptable, leaving the prospects for a settlement uncertain. Supporting prices further, US crude inventories fell by 1.9 million barrels in the week ended October 23.