Key Highlights

● Brent crude fell 0.48% to $114.77 a barrel in Thursday's session.

● Brent is up 17.12% on the month and 88.68% since the start of the year.

● US crude stocks fell 1.9 million barrels, the fourth weekly draw in a row.

● The ICE gasoil crack fell towards $70 a barrel, its lowest since early October.

Brent crude oil fell 0.48% to US$114.77 a barrel in Thursday's session on 29 October, edging away from four-year highs as renewed diplomatic contacts between Washington and Tehran took some heat out of the market. The international benchmark has still gained 17.12% in a month, a sign of how much war risk traders have built into the price.

The December ICE Brent contract, priced in US dollars per barrel, is up 1.45% on the week, 88.68% since the start of the year and 78.36% from a year ago, which means the benchmark has almost doubled in 2026. WTI, the US benchmark, fell 0.92% to US$101.83, leaving Brent at a premium of about US$12.94. ICE Brent futures expire well before their delivery month, so the front-month reference moves to January shortly and quoted levels can shift with the spread between contracts.

A Risk Premium Meets Diplomacy

Brent is being pulled in two directions. On one side is the fear of renewed US military action against Iran after the 3 November midterm elections, which has kept a heavy risk premium in the price. On the other are fresh diplomatic signals and new supply from Europe, which give traders a reason to take some of that premium out. Thursday's small fall shows the second force gaining ground without yet overturning the first.

Washington and Tehran Trade Signals

US Vice President JD Vance reportedly contacted Iranian officials, and Foreign Minister Abbas Araghchi said Tehran remained open to diplomacy. President Donald Trump confirmed communication with Iranian authorities, though he described the outreach as focused on medical supplies and acknowledged uncertainty over whether negotiations would succeed. Qatari mediators have also presented a new draft deal.

Earlier reports pointed the other way. US officials advised Gulf states to prepare for a short, intense campaign, with President Trump reportedly leaning towards a large attack after the election, and a third US carrier group was reported heading towards the Gulf. Regional energy flows have recovered to levels close to those before the war, which has helped limit the physical damage so far.

Attacks on Saudi Infrastructure and a Tight Physical Market

Supply risk has not faded. Reports describe repeated Houthi attacks on Saudi energy infrastructure and a fire near Ras Tanura, the kingdom's biggest oil-export terminal. The fire was contained, though the extent of damage was unclear.

Inventories add to the tightness. The EIA reported a 1.9 million barrel draw in US crude stocks, the fourth weekly fall in a row. Commercial crude stocks stood at 410.6 million barrels for the week ended 23 October, about 4% below the five-year average, and Strategic Petroleum Reserve holdings are at their lowest since October 1982. Preliminary industry data also showed a US crude draw of about 2 million barrels.

Shipping is stretched too. Freight costs are at record levels, tanker capacity is tight and Chinese imports are recovering. ADNOC has told some Asian refiners that part of their supply will move through a new pipeline in early 2027.

Diesel Signals and Reserve Releases

Products are sending a softer message than crude. Europe plans to release 42 million barrels of oil reserves over the next three months, half of it diesel, to increase available supply and moderate energy costs. Russia lifted its diesel export ban earlier in October, and temporary US Treasury authorisation for certain transactions involving Russian diesel is expected to ease availability further.

The effect has shown up in the ICE gasoil crack, the premium of diesel over crude, which fell towards US$70 a barrel, its lowest since early October. Additional Chinese fuel-export quotas and higher production elsewhere are also expected to improve supply. A narrower diesel premium suggests that product markets are less stressed than the crude price implies.

Brent Watch: Midterms, OPEC+ and the January Roll

The next catalysts arrive in quick order. OPEC+ meets on 1 November, the US midterm elections follow on 3 November, and weekly EIA inventory data, including Cushing stocks, will show whether the run of crude draws continues. Any confirmation of damage at Ras Tanura would carry weight, as would the switch of the Brent front month from December to January.

Prices could be supported by resumed US strikes, confirmed damage to Saudi facilities or further inventory draws. They could ease if a credible deal emerges between Washington and Tehran, if Saudi infrastructure proves intact, if diesel margins keep narrowing or if the European reserve release adds enough supply.