Oil prices slipped in Asian trading on Thursday after a report that the United States was exploring additional diplomatic engagement with Iran. The market's recent rebound from roughly two-month lows proved short-lived as uncertainty over supply and a fresh inventory surprise weighed on sentiment.
By 20:52 ET (01:52 GMT), Brent futures had declined 1.2% to $91.63 a barrel, while West Texas Intermediate futures were down 1.1% at $85.55 a barrel.
Diplomatic development
The Wall Street Journal reported that U.S. Vice President JD Vance was weighing in-person talks with a senior Iranian security official. According to the report, the proposal represents a renewed U.S. effort to seek an end to the long-running conflict with Iran, with the discussions described as preliminary.
The same report noted that U.S. President Donald Trump has expressed openness to Vance restarting talks, while Vance has directly linked the conflict to political consequences - in particular, blaming the war for eroding Republican performance in the November midterm elections.
Supply-side uncertainty remains
Despite the prospect of more diplomacy, several supply-side factors continued to keep markets on edge. Tensions around the Strait of Hormuz and a naval blockade involving Tehran remained unresolved, leaving the potential for disruptions in shipping and crude flows in the region.
Iran was reported to have continued attacks on vessels transiting the Strait of Hormuz over the past week, while Iranian officials have largely denied that any direct talks with the United States have taken place.
Meanwhile, fighting persisted between Saudi Arabia and Yemen’s Iran-backed Houthi forces, with the Houthis reported to be targeting additional Saudi oil infrastructure. These ongoing hostilities add another layer of risk to Middle East supply.
Inventory surprise and market context
Compounding market uncertainty, U.S. industry data showed an unexpected build of 9 million barrels in crude inventories in the past week. The industry print is often viewed as a precursor to the official government inventory figures, which were due later on Thursday.
Prices had already endured sizable losses over the prior week after U.S. midterm election results - in which Democrats claimed majorities in both chambers of Congress - fostered expectations of increased pressure on Washington to press for an end to the Iran conflict. That political backdrop had contributed to downward pressure on crude before this week’s short-lived recovery.
Outlook
Markets are balancing the potential for renewed diplomacy with persistent signs of supply risk. The preliminary nature of reported discussions and continuing regional hostilities mean price direction remains sensitive to both political developments and near-term inventory readings.