Oil prices fall as peace hopes offset fears of growing Middle East conflict

TOKYO, Oct 29 : Oil prices fell on Thursday, paring the previous day's gains, as hopes for peace talks took the edge off renewed concerns over Middle East supply disruptions from escalating regional conflict.

Brent crude futures declined 82 cents, or 0.7 per cent, to $114.50 a barrel by 0132 GMT. US West Texas Intermediate (WTI) crude futures were down $1.04, or 1.0 per cent, at $101.74.

Brent rose 1.3 per cent and WTI gained 3 per cent on Wednesday.

US Vice President JD Vance sought to revive peace negotiations by sending a letter to Iranian Security Council chief Mohsen Rezaei, the Wall Street Journal said on Wednesday, citing US officials and people familiar with the matter.

"Selling pressure is prevailing amid expectations that peace talks may resume," said Yuki Takashima, an economist at Nomura Securities. "However, the decline remains limited."

This was due to concerns over intensified attacks by the Houthis and fears the US may launch an attack on Iran following its mid-term elections set for November 3.

The Saudi-led coalition fighting Yemen's Houthis said it destroyed a ballistic missile fired by the group towards the kingdom's eastern region early on Thursday, as hostilities between both sides show no signs of abating.

The Houthis attacked Aden airport on Wednesday, Yemeni government forces said.

The attack came a day after the Houthis said they hit Saudi Arabia's biggest oil refinery with a missile, stepping up strikes against the world's second-largest crude producer after the United States.

Saudi authorities did not immediately confirm the strike on the 550,000-barrel-per-day facility.

Qatari mediators have presented Iran with a new draft deal to end the war with the US and Israel, an official briefed on the negotiations said, but a senior Iranian official dismissed it as unacceptable ideas that did not amount to an offer.

Iran's foreign minister said on Wednesday Tehran continued to give diplomacy a chance to succeed and flagged the possibility of completing its seven-day plan in less than a week if adopted.

The US Energy Information Administration said on Wednesday that energy firms pulled 1.9 million barrels of crude from storage during the week ended October 23, versus analysts forecast of a 15,000-barrel build in a Reuters poll.

But gasoline stockpiles rose by 3.9 million barrels, against analysts' expectations for a draw of 0.9 million barrels.​