Oil Prices Fall More Than $1 as Easing Geopolitical Fears and Supply Concerns Weigh on Markets

Oil prices declined by more than $1 per barrel on Thursday, November 12, as growing hopes for diplomatic progress in the Middle East and the Russia-Ukraine conflict reduced concerns about potential supply disruptions. Expectations of higher oil production and rising US crude inventories also added pressure to the market.

Brent crude futures fell $1.14, or 1.2%, to $91.62 per barrel, while US West Texas Intermediate (WTI) crude dropped $1.04, or 1.2%, to $85.49. The declines followed gains in both benchmarks during the previous trading session.

Peace Hopes Reduce Market Risk Premium

Investors are closely monitoring diplomatic efforts to ease tensions involving Iran and Russia. Russian and Ukrainian negotiators agreed to a major prisoner exchange during two days of talks in Abu Dhabi, although significant disagreements over territorial issues remain.

Markets are also assessing the possibility that the Iran conflict may avoid further escalation ahead of an upcoming US-China summit. However, uncertainty surrounding shipping through the Strait of Hormuz continues to limit expectations of a sharper decline in oil prices.

Higher Production and US Inventories Add Pressure

Supply concerns eased further after OPEC+ crude oil production increased sharply in October, led by higher output from Saudi Arabia despite continued disruptions to shipments through the Strait of Hormuz.

Meanwhile, US crude inventories increased by approximately 9 million barrels in the latest week, according to data from the American Petroleum Institute (API). The figures added to concerns about an expanding supply outlook, with official US Energy Information Administration data expected later on Thursday.

Oil Market Outlook Remains Uncertain

Despite the latest decline, oil prices remain exposed to geopolitical developments and possible disruptions to global energy supplies. Traders are expected to monitor diplomatic negotiations, production levels and inventory data for further direction in the coming sessions.

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