Oil prices fell on Thursday as hopes for renewed talks between the United States and Iran outweighed fears of further Middle East supply disruption. Brent crude settled down 44 cents, or 0.38 percent, at $114.88 a barrel, while US West Texas Intermediate fell 78 cents, or 0.76 percent, to $102.00.

Both benchmarks had dropped by more than $2 a barrel earlier in the session, unwinding part of Wednesday's gains, when Brent rose 1.3 percent and WTI rose 3 percent. The pullback came after reports that US Vice President JD Vance had written to Mohsen Rezaei, head of Iran's Supreme National Security Council, in an effort to revive negotiations.

Diplomacy pulls one way, attacks the other

Qatari mediators have presented Iran with a new draft deal, according to an official briefed on the negotiations, but a senior Iranian official dismissed it as unacceptable ideas rather than an offer. UBS analyst Giovanni Staunovo said oil was under pressure from renewed diplomatic efforts to de-escalate the conflict.

At the same time, the Houthis said on Thursday they had attacked Saudi refineries and Aramco facilities, claims Saudi Arabia had not immediately confirmed. Reports of those attacks helped oil recover some losses later in the session, according to Again Capital partner John Kilduff.

Oil majors stay away from Abu Dhabi show

The security climate was underlined by a Reuters report that US oil firms ExxonMobil and Chevron have cancelled plans for executives to travel to the United Arab Emirates' biggest oil show next week, citing security concerns. A Saudi-led coalition also said it destroyed a Houthi ballistic missile aimed at the kingdom's eastern region early on Thursday.

With a possible US military campaign after the 3 November midterms still unresolved, traders face two competing forces: diplomacy that could ease the risk premium, and attacks that could restore it.

Sources: Reuters via Euronext; The Wall Street Journal.