Brent crude futures briefly tumbled to $96 a barrel before rebounding to $98.50 as diplomatic efforts to end the nine-month war with Iran progressed toward the end of the week. President Trump spoke with Qatar's emir about Doha's efforts to broker a peace deal between Washington and Tehran.
The Democratic sweep in Tuesday's midterms and Trump's subsequent comments that he had no immediate plans to strike Iran have eroded the war risk premium in crude. Brent is on track for its steepest weekly decline since the oil market crash of April 2020.
President Trump and Qatar's Emir Sheikh Tamim bin Hamad Al Thani held a call "aimed at reaching a comprehensive agreement to end the regional crisis," according to a report from Arab Weekly.
More color about this week's diplomatic signals from the London-based newspaper:
Iran sent the United States a nuclear proposal through Qatar, which Tehran says can be discussed only after Washington meets its seven demands, a senior Iranian official told Reuters on Thursday.
The official, speaking on condition of anonymity, said the United States was reviewing the proposal but declined to give further details.
Mediators have stepped up efforts to end the war between Iran and the United States amid fears that hostilities could resume after the US midterm elections. Trump on Tuesday declined to rule out restarting combat operations after the vote, while Iran is planning a wider retaliation if the war resumes.
Iran's top security official Mohsen Rezaei said earlier on Thursday, during a visit to Russia: "On the issue of diplomacy, we have announced seven conditions to the Americans. As long as they do not execute our seven conditions, we will neither open the Strait of Hormuz nor have negotiations."
Iran has called for the lifting of US sanctions, the release of frozen Iranian assets and war reparations, among other conditions. Washington, meanwhile, has insisted that nuclear issues must be included in any initial negotiations.
Separately, Iran's state broadcaster, IRIB, cited Ali Bagheri Kani, deputy secretary of Iran's Supreme National Security Council, who said, "Iran must see practical US actions with its own eyes, and once those actions are observed, the ground will be set to open a new chapter," adding, "It is Iran's right not to settle for paper commitments from the Americans before entering a new stage of diplomacy."
On Thursday, UBS energy expert Dominic Ellis wrote that the collapse in crude's war risk premium this week reflects the prospects for peace and the potential for the Strait of Hormuz to reopen fully. But he warned that those hopes are colliding with the harsh reality that replenishing depleted global oil stockpiles could take considerable time.
Ellis pointed out that the conflict has drained nearly 700 million barrels from global inventories. Fundamentals still point to a severe global energy crisis that won't dissipate anytime soon.
Read the UBS report here. Our report earlier this week showed that US distillate stockpiles plunged below 100 million barrels for the first time since 2003.