Oil markets pulled back on Thursday, with Brent crude down 1.1% to $114.10 per barrel and West Texas Intermediate down 1.3% to $101.45, after reports that US Vice President JD Vance wrote to Iranian security official Mohsen Rezaei seeking to revive peace talks. The diplomatic signal tempered fears of a post-midterms US strike on Iran, which had helped push Brent up 1.3% to $115.32 on Wednesday.
Goldman Sachs expects Brent to fall to $90 by December, implying roughly 21% downside from Thursday's level. The bank estimates that about $27 a barrel reflects fears of future supply disruptions rather than current shortages, placing Brent's underlying fair value near $85. JPMorgan similarly values Brent near $94.
US inventory data showed crude stocks fell 1.9 million barrels, a fourth straight weekly draw, while gasoline inventories rose 3.9 million barrels and implied petrol demand dropped by 622,000 barrels per day. The International Energy Agency projects global oil demand will decline by an average of 2.6 million barrels per day in 2026. Analysts including ING's Warren Patterson said the market is pricing a larger probability of re-escalation, while Energy Aspects' Tim Skirrow noted traders are buying Brent call options ahead of the US midterms. With US GDP and PCE inflation due Thursday and an OPEC+ meeting on Sunday, near-term oil, and therefore inflation, direction remains headline-driven.
