Oil Slips as Peace Hopes Erode Supply Risk Premium

Key Takeaways:

*Oil reverses Wednesday’s gains: Brent fell 1.2% to $91.62, while WTI declined 1.2% to $85.49 in early Thursday trading.

*Diplomatic optimism pressures prices: Hopes for progress on Iran and Russia–Ukraine reduced the supply-risk premium, although comprehensive agreements remained elusive.

*Hormuz risks persist: Iran’s nuclear stance complicates negotiations, while mines, insurance costs and shipping insecurity could delay normal oil flows even after a deal.

Market Summary:

Oil surrendered Wednesday’s recovery in early Thursday trading as renewed diplomatic optimism reduced the premium attached to potential supply disruptions. Brent fell 1.2% to $91.62 a barrel, while WTI declined 1.2% to $85.49 at 01:41 GMT on November 12. The retreat followed Wednesday’s settlements of $92.76 for Brent and $86.53 for WTI. Traders weighed the possibility of progress toward ending the Middle East and Russia–Ukraine conflicts, although neither diplomatic process had produced a comprehensive settlement. 

Iran’s nuclear position remained a major obstacle to de-escalation. Security chief Mohsen Rezaei said Iran would not allow enriched nuclear material to leave the country and warned of consequences from further U.S. strikes. Washington has insisted that nuclear issues form part of initial negotiations. Continued Hormuz shipping risks also limit confidence that a political agreement would immediately restore normal oil flows: mine clearance, insurance costs and shipowners’ willingness to transit the waterway would remain important constraints. These operational risks helped support Wednesday’s rebound despite expectations of eventual diplomatic progress. 

Improving supply conditions provided a competing source of downward pressure. Reuters reported that Middle Eastern crude and condensate outages had declined to approximately 3.8 million barrels per day, with Saudi and Iraqi production returning to pre-war levels. Separately, market sources citing API figures reported a 9-million-barrel increase in U.S. crude inventories, ahead of Thursday’s delayed official release. Softer physical Brent pricing and difficulty finding buyers for some North Sea cargoes also suggested easing tightness in parts of the market. Together, these developments could restrain prices if geopolitical conditions stabilize.

Russia added further uncertainty. Wednesday’s Abu Dhabi talks produced agreement on a major prisoner exchange, but differences over territory remained unresolved. Meanwhile, Ukrainian attacks continued to threaten Russian energy infrastructure, including Ust-Luga, and Reuters reported that refinery capacity had been reduced by approximately 30% since late October. Refinery damage primarily threatens fuel-product availability and does not imply an equivalent loss of crude production. Oil therefore faces opposing forces: diplomacy and recovering supply pressure prices, while infrastructure damage and shipping insecurity support them. Thursday’s official U.S. inventories and the IEA report scheduled for November 13 are the next important tests of the supply outlook.

Technical Analysis

CL-Oil, H4:

Crude oil remains under bearish pressure, with price trading around 85.65 after its latest recovery failed to hold above 87.45. Following the earlier breakdown below the ascending trendline, oil has continued to form lower highs and lower lows, suggesting that sellers retain control. The rejection around 87.45 reinforces this former support as immediate resistance, while the recent lows near 84.00 provide the next downside reference.

Momentum indicators show some easing in selling pressure, although a bullish reversal remains unconfirmed. The RSI stands at 34, slightly above its moving average at 32.80, but still well below the neutral 50 level. Its retreat following a brief recovery toward the low 40s highlights limited buying strength. Meanwhile, the MACD line remains above the signal line, with a positive histogram. This suggests that downward momentum has moderated, but both lines remain below zero, and the shrinking positive histogram indicates that the recovery is losing strength.

Resistance Levels: 87.45, 93.40

Support Levels: 80.20, 74.85