KEY POINTS
- Brent rises to $93.21, while WTI reaches $86.80 a barrel.
- US-Iran tensions and Strait of Hormuz risks support prices.
- US crude inventories increase by nine million barrels.
Oil prices recovered on Thursday after falling by more than $1 a barrel during early Asian trading, as persistent geopolitical tensions in the Middle East offset concerns about increasing crude production in the region.
Brent crude futures rose by 45 cents, or 0.49%, to $93.21 a barrel by 0732 GMT, while US West Texas Intermediate (WTI) crude gained 27 cents, or 0.31%, to trade at $86.80.
The recovery came as uncertainty over negotiations between the United States and Iran continued to raise concerns about possible disruptions to global oil supplies.
US-Iran tensions keep oil market uncertain
Iran’s security chief, Mohsen Rezaei, said the country would not allow any enriched nuclear material to leave its territory. He also warned that there would be consequences if the United States launched further military strikes against Iran.
Washington has maintained that Iran’s nuclear programme must be addressed in any initial negotiations aimed at ending the eight-month-old conflict. However, US officials have played down the need for additional military action.
The opposing positions have complicated efforts to reach a broader agreement that could ease tensions around the Strait of Hormuz, one of the world’s most important routes for oil shipments.
Shipping activity in the waterway remains exposed to security threats, with reports of tankers still burning, oil spills reaching coastal areas and drones and missiles striking infrastructure across the region.
According to Ole Hansen, head of commodity strategy at Saxo Bank, the current situation has allowed Middle Eastern oil production to recover despite the lack of progress in US-Iran negotiations.
He said the return of disrupted production was putting pressure on crude prices, although geopolitical risks were limiting the potential for further declines.
OPEC+ production increases
Oil supply from the Middle East has also increased, adding pressure to prices.
OPEC+ crude production rose in October, supported by higher output from Saudi Arabia despite continuing shipping disruptions through the Strait of Hormuz.
The increase in regional production has helped restore some supply to the market following earlier disruptions caused by the conflict.
However, the possibility of renewed military escalation and further interruptions to oil shipments continues to create uncertainty for traders.
US crude inventories record sharp increase
Additional pressure came from rising oil inventories in the United States.
Data from the American Petroleum Institute (API), cited by market sources, showed that US crude stockpiles increased by nine million barrels in the latest week.
The increase suggests that domestic oil supplies are building, which could weigh on prices if confirmed by official government figures.
The US Energy Information Administration (EIA) was expected to release its weekly inventory report on Thursday. The publication had been delayed by a day because of a public holiday in the United States on Wednesday.
Russia and Ukraine make progress on prisoner exchange
Developments in the Russia-Ukraine conflict also featured in the wider geopolitical outlook.
Russian and Ukrainian negotiators agreed to a major prisoner exchange following two days of peace talks in Abu Dhabi that ended on Wednesday.
However, US mediators said significant differences remained over other issues, including territorial questions.
Ukrainian President Volodymyr Zelenskiy said Kyiv hoped to achieve concrete progress towards resolving the war before the end of the year.
