WASHINGTON (dpa-AFX) - Crude oil prices have moved lower on Thursday, partly offsetting the gains from yesterday's session, as expectations of a possible de-escalation in the U.S.-Iran conflict heightened after U.S. Vice President JD Vance urged Iran to return to negotiations soon. Separately, Qatar is pressing Iran to reach a negotiatory framework with the U.S.
WTI Crude Oil for December delivery was last seen trading down by $0.79 (or 0.77%) at $101.99 per barrel.
Yesterday, in a significant development in the U.S.-Iran crisis, after several months, the U.S. initiated a senior-level outreach to Iran.
The Wall Street Journal reported that Vance sent a letter to the Secretary of Iran's Supreme National Council Mohsen Rezaei urging Iran to swiftly revive peace negotiations and accelerate measures to defuse the situation.
Setting off a diplomatic process, Vance intends to convince U.S. President Donald Trump to pause his planned military maneuvers against Iran.
Citing an informed source, the WSJ reported that the letter did not intend to secure a peace deal immediately but wanted Iran to discuss about a framework for negotiations. Reportedly, the letter has been well-received by Iran.
Striking a different note, Trump stated that Vance's actions were aimed at helping Iran get medical supplies, but yesterday, Trump admitted that negotiations with Iran are taking place though he was pessimistic about the outcome.
With support from Saudi Arabia, Egypt, and Turkey, Qatar is separately working to end the U.S.-Iran crisis. The nation is engaged in persuading Iran to permit U.N. inspectors to visit Iran's nuclear sites.
The New York Times reported that through the letter, Vance proposed a meeting between the U.S. and Iran soon, with Vance leading the U.S. delegation. Vance wanted Iran's nuclear program to be addressed during the discussion.
Earlier on Wednesday, Iran's Foreign Minister Abbas Araghchi remarked that even though Iran can defend itself against any attack, it wishes to give diplomacy a chance.
Iran is yet to officially respond but energy markets are taking an optimistic stance, expecting success in future negotiations.
Over the past few days, fear of renewed escalation in the Middle East drove supply concerns higher.
Now, the possibility of a pause on the planned U.S. strikes against Iran, even though slim, has alleviated the concerns, thereby pulling down crude oil prices.
The Strait of Hormuz continues to remain closed for international shipping. Iran's Islamic Revolutionary Guards Corps announced that three oil tankers that attempted to violate Iranian guidelines for navigating the strait hit sea mines and caught fire.
Elsewhere in the Middle East, airstrikes by a Saudi Arabia-led coalition hit a crowded market in northern Yemen, keeping gulf tensions alive.
Experts are of the view that in the event of a breakthrough in U.S.-Iran negotiations as well as a de-escalation in the Saudi Arabia versus Houthi conflict, crude oil prices could undergo a sharp correction. However, if talks collapse, leading to a new military campaign by the U.S., global energy prices could rise significantly.
On the monetary front, as widely predicted by economists, at the end of its two-day meeting yesterday, the U.S. Federal Reserve announced its decision to hold interest rates steady.
The U.S. dollar index was last seen trading at 101.96, down by 0.23 (or 0.23%) today.
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