Global oil prices fell on Thursday, October 29, amid new diplomatic contacts between the US and Iran. Investors are assessing the possibility of resuming negotiations, which could prevent another military escalation in the Middle East and reduce risks of oil supply disruptions. This was reported by Bloomberg.

During Asian trading, Brent oil futures fell to $113.85 per barrel, losing about 1.3%. US West Texas Intermediate (WTI) traded near $101 per barrel. Later, the decline slowed somewhat: according to Barron's, Brent was at $114.37 and WTI at $101.50 per barrel, losing 0.8% and 1.2%, respectively.

The main reason for the decline was the report of US Vice President JD Vance's outreach to Iranian leadership. According to The Wall Street Journal, Vance, at the direction of President Donald Trump, sent a letter to Mohsen Rezaei, Secretary of Iran's Supreme National Security Council. The aim of the contact was to find out the possibility of resuming peace talks.

Trump confirmed the fact of contacting the Iranian side, but said the letter was primarily about a medical aid offer. However, in an interview with Axios, he admitted that the US and Iran are exchanging messages through intermediaries, but expressed uncertainty about the success of negotiations.

Iranian Foreign Minister Abbas Araghchi also said Tehran continues to give diplomacy a chance. However, no new agreements have been announced yet.

Further price declines are limited by risks of renewed US strikes on Iran. Trump has repeatedly allowed for another military operation after the US midterm elections scheduled for November 3. Threats also remain to oil infrastructure of the Persian Gulf countries and shipping through the Strait of Hormuz.

Despite the current cheapening, Brent has risen about 10% since early October, reaching its highest levels since April. The long conflict in the Middle East supports high energy prices, increasing business costs and inflationary pressure in the global economy.

As previously reported by "Kurs Ukrainy", on October 28 oil rose in price due to reports of a possible new US military campaign against Iran. The current decline in quotations reflects changing trader expectations after information emerged about direct diplomatic contact between Washington and Tehran.

Based on materials from: Bloomberg, The Wall Street Journal, Barron's