Oil prices steady as investors weigh geopolitics, lower US stockpiles
US crude stocks have fallen by 3.06 million barrels to 412.5 million barrels as at last week
Crude oil prices remained stable on Wednesday, with investors considering the potential for peace talks between Russia and Ukraine, along with declining US oil stocks and lack of dialogue between the US and Iran. Brent crude futures saw a slight gain of $0.03, or 0.03%, to $108.82 a barrel, while WTI crude fell $0.67, or 0.7%, to $97.15.
Both benchmarks had surged over $2 earlier, with Brent nearing five-month highs. The previous session saw Brent reach a five-month peak, while WTI achieved a six-month high before prices fell due to ongoing attacks in the Strait of Hormuz, with at least two more ships struck overnight. Russian President Vladimir Putin has agreed to resume US-mediated peace talks with Ukraine as early as November, following a meeting with US envoy Steve Witkoff.
The ongoing negotiations between the US and Russia for a potential Ukraine peace deal have negatively impacted crude prices, as progress seems to be made. A peace deal between Ukraine and Russia could potentially address the tight global diesel supplies that have fueled crude bulls in recent weeks. Recent attacks on at least 18 vessels in the past two weeks, according to Kpler data, have further raised concerns.
Additionally, Iran's Foreign Minister Abbas Araqchi stated that Iran is ready to defend itself, while President Masoud Pezeshkian emphasized that the US cannot expect dialogue while blockading and threatening Iran. Iran-aligned Houthis claimed responsibility for attacks on a Saudi Aramco site, Shaybah oilfield, and Saudi Arabia's Riyadh and Abha airports.
The Trump administration has offered to loan nearly a third of the one million-barrel US emergency heating oil reserve, aiming to contain prices that have surged due to diesel shortages from the wars in Iran and Ukraine. The EIA reported a decrease of 3.06 million barrels in US crude stocks, now standing at 412.5 million barrels, compared to the expected 820,000-barrel draw.
Distillate stockpiles, including diesel and heating oil, rose by 1.68 million barrels to 104.3 million barrels, exceeding expectations for a 1.16 million-barrel decline.
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