Oil prices fell more than 1% on Thursday as investors weighed the possibility of progress in diplomatic efforts to end the Iran war and the Russia-Ukraine conflict, easing some concerns over potential supply disruptions.Brent crude futures declined $1.14, or 1.2%, to $91.62 a barrel by 0141 GMT, while US West Texas Intermediate (WTI) crude futures dropped $1.04, or 1.2%, to $85.49. The losses came a day after both benchmarks recovered from two-month lows, with Brent gaining 1.4% and WTI rising 0.6% on Wednesday.Hopes of a breakthrough in the Russia-Ukraine conflict have offered some relief to oil markets. Negotiators from Moscow and Kyiv agreed to a major prisoner exchange following two days of US-mediated discussions in Abu Dhabi, which concluded on Wednesday. However, disagreements over key issues, particularly territorial control, remain unresolved. Ukrainian President Volodymyr Zelenskiy has said Kyiv hopes to make tangible progress towards ending the war this year.The possibility of the Iran conflict avoiding further escalation ahead of next week’s US-China summit has also influenced market sentiment.“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 at Nissan Securities Investment, a unit of Nissan Securities.He said the situation around the Strait of Hormuz could nevertheless prevent a steep decline in crude prices.“However, given the uncertainty surrounding the Strait of Hormuz, the markets are unlikely to suffer a significant collapse,” Kikukawa said.Tensions over Iran’s nuclear programme continue to complicate the prospect of negotiations. Iranian security chief Mohsen Rezaei said Tehran would not allow even a single particle of enriched nuclear material to leave the country and warned of consequences if the US launched fresh strikes. Washington has insisted that nuclear issues must feature in initial negotiations aimed at ending the eight-month-old war, although US officials have played down the need for further military action.On the supply front, OPEC+ crude production recorded a sharp increase in October, driven largely by higher output from Saudi Arabia, even as shipments through the Strait of Hormuz continued to face disruption.US inventory data also pointed to an increase in available supplies. Crude stocks rose by 9 million barrels in the latest week, according to figures from the American Petroleum Institute cited by market sources. The official report from the US Energy Information Administration is due on Thursday, after its release was pushed back by a day because of the Veterans Day holiday.
