Crude oil prices extended their decline today, with both Brent crude and WTI shedding over $1 in Asian trade earlier in the day on growing hopes for peace in Ukraine and Iran.
At the time of writing, Brent crude was trading at $91.32 per barrel, and West Texas Intermediate was changing hands for $85.32 per barrel.
Peace hopes for Russia and Ukraine came on the heels of the latest meeting of negotiators, even though that meeting did not end in anything resembling a future peace deal. Besides yet another prisoner exchange, the two sides remain committed to their demands.
In Iran, the situation is rather similar, with the latest from Iran coming from the head of Iran’s Supreme National Security Council, who said this week none of the enriched uranium Iran already has will leave the country and if the United States launches new strikes against the country, there will be a response, Reuters reported, citing a televised statement by Mohsen Rezaei.
“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,” Hiroyuki Kikukawa from Nissan Securities Investment said, as quoted by Reuters.
Meanwhile, reports of higher OPEC oil production in October helped pressure prices, as did the American Petroleum Institute’s latest estimate of crude oil inventories, which showed a build. However, news updates from the Strait of Hormuz showing continued attacks on tankers limited some of the losses. The latest price movements suggest hopes for peace are trumping concerns about tanker movement safety in the Persian Gulf.
“While expectations of improving Middle Eastern supply availability and bearish US inventory data have weighed on the market, uncertainty around the US-Iran conflict continues to provide some support,” ING commodity strategists wrote in a note on Wednesday.
By Irina Slav for Oilprice.com
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