Oil Prices Dip as Iran Diplomacy Resurfaces

Global oil prices weakened during trading on Thursday (October 29) as market participants monitored new diplomatic efforts aimed at preventing the resumption of U.S. military strikes against Iran. Brent crude fell below $111 per barrel—having risen by more than 1% in the previous session—while West Texas Intermediate (WTI) hovered around $101 per barrel.

Downward pressure on oil prices emerged following reports that U.S. Vice President JD Vance had reached out to Mohsen Rezaei, a high-ranking Iranian security official. Iranian Foreign Minister Abbas Araghchi also indicated that Tehran remains open to diplomatic channels, while President Donald Trump acknowledged that communication with Iran continues through intermediaries.

The uptick in diplomatic activity prompted profit-taking, following a roughly 10% surge in Brent prices throughout the month. Hopes for de-escalation helped reduce some of the geopolitical risk premium, though the market remains cautious regarding the possibility of new military operations following the U.S. midterm elections on November 3.

On the supply side, market indicators remain mixed. Saudi Arabian exports have held near their highest levels seen during the ongoing conflict, while U.S. crude oil inventories fell by 1.9 million barrels last week—reaching their lowest level since July. U.S. oil exports also reached their strongest pace since May, even as gasoline stocks in the Midwest dropped to an all-time low.

In the short term, the trajectory of oil prices remains heavily dependent on developments in U.S.-Iran diplomacy and the potential for escalation following the U.S. midterm elections. Progress in negotiations could further compress the risk premium, whereas a diplomatic failure—or the outbreak of new attacks—could quickly drive Brent and WTI prices back up.