Oil Declines as Traders Parse Signs of Fresh Diplomacy on Iran

(Bloomberg) -- Oil dropped as traders weighed fresh diplomatic efforts in the Middle East to avert a potential restart of US military strikes on Iran.

West Texas Intermediate fell toward $102 a barrel, after rising almost 3% in the previous session, while Brent closed near $115. Iran's Foreign Minister Abbas Araghchi said that Tehran continued to give diplomacy chance, and the Wall Street Journal reported US Vice President JD Vance had reached out to Mohsen Rezaei, secretary of the nation's top security body.

President Donald Trump told Axios on Wednesday that negotiations were taking place through mediators but stressed he didn't know whether they would bear fruit. "We need to finish the job — either through a deal or another way — we will find out if negotiations can succeed," he was quoted as saying.

Global crude benchmark Brent has rallied by 11% this month, touching the highest since April, as the conflict dragged on. The surge has heaped pressure on consumers and presented a challenge to central bankers seeking to contain inflation. While the Federal Reserve opted to keep policy unchanged this week, traders expect officials to resume tightening in December.

US voters will go to the polls on Nov. 3 for midterm elections amid signs that there'll be a slump in support for Republicans. President Trump has given frequent signals that he may opt to resume a military campaign against Tehran after ballots have been cast, possibly in coordination with Israel's forces.

In Israel, Prime Minister Benjamin Netanyahu edged ahead of opposition leader Gadi Eisenkot after a tightly fought election, although neither has a clear path toward forming a government. It will be days before President Isaac Herzog chooses who gets the chance to cobble together a new ruling coalition.