Key Highlights

● Brent settled at $114.88 on Thursday, down 44 cents.

● Brent had been down more than $2 at its weakest point.

● The Brent-WTI spread stood at $12.88 after WTI settled at $102.00.

● Traders are pricing the risk of a US strike on Iran after November 3.

The global oil benchmark swung through a wide range on Thursday before finishing just 44 cents lower, a comeback that showed how quickly Supply fears can overwhelm peace hopes.

A round trip in a single session

Brent crude, the international benchmark, settled at $114.88 a barrel on Thursday, October 29, down 44 cents, according to media reports. That small net loss disguised a dramatic day. At its weakest point, Brent had been down more than $2, according to media reports, before staging a comeback that erased most of the decline.

The shape of the session told the story of the oil market right now: early optimism about diplomacy, followed by a reminder that the physical risks to supply have not gone away.

Diplomacy drives prices down

The selling had a clear catalyst. Reports of renewed diplomatic efforts around the conflict involving Iran gave traders a reason to trim positions. Vice President JD Vance sent a letter to Mohsen Rezaei, head of Iran's Supreme National Security Council, according to media reports, and a Qatari draft deal was under discussion.

"Oil prices are under pressure today amid renewed diplomatic efforts to de-escalate the conflict in the Middle East," said one Commodity analyst, according to media reports.

Brent was also coming off a gain on Wednesday, which left room for profit-taking.

The risks reassert themselves

Other headlines pointed the other way. An Iranian official called the Qatari draft "unacceptable." Houthi strikes hit Saudi energy facilities. Iran's Revolutionary Guard said three tankers struck sea mines south of the Strait of Hormuz. All were reported by media outlets.

One research firm warned in a note that "threats to regional infrastructure remain active despite the renewed push for negotiations."

Each of those events speaks directly to Brent, which reflects seaborne crude flowing through the Middle East and into Europe and Asia. Threats to shipping lanes and Gulf production facilities hit Brent especially hard.

Near the top of its range

Even after Thursday's dip, Brent remains historically elevated. It recently fell below $115 after reaching a four-year high, according to one headline. Thursday's settlement left it hovering right around that line.

The gap between Brent and WTI is also wide. With WTI settling at $102.00, Brent closed $12.88 higher, a spread that reflects how much of the current risk premium is concentrated in internationally traded crude exposed to Middle East disruptions.

Middle East headlines are not the only influence. "There are mixed signals coming from Russia about what they are going to do," said one energy analyst, according to media reports, referring to uncertainty about Russian diesel. A bank note said "The silence has allowed Russian refinery runs to rebound by 350,000 barrels a day last week."

Spillover into markets

Elevated oil prices helped push September's PCE Inflation higher, with energy and gasoline costs jumping, according to one report. That fed expectations of a December rate hike by the Fed.

Wall Street's main indexes were weighed down by Big Tech rather than oil. The S&P 500 slipped 23.59 points to 7,720.39 and the Nasdaq Composite fell 365.13 points to 26,184.72. The energy sector dipped at midday, according to market data.

What to watch

The key question is whether diplomacy can gain traction. The Iranian rejection of the Qatari draft shows how far apart the sides remain. Traders are also pricing the risk of a US strike on Iran after the November 3 midterms, according to media reports.

Any new attacks on tankers or Gulf facilities could push Brent decisively back above $115. A credible breakthrough would likely do the opposite. Friday's Earnings from Chevron (NYSE:CVX) will add a corporate view on the price environment.