Oil prices fell more than $1 a barrel on Thursday 12 November as hopes of progress in peace talks over the Middle East and the Russia-Ukraine war eased fears of further escalation.

Brent crude futures were down $1.47, or 1.58%, at $91.29 a barrel by 0426 GMT, while US West Texas Intermediate (WTI) crude slipped $1.24, or 1.43%, to $85.29, Reuters reported. Earlier in Asian trading, Brent had lost $1.14 to $91.62 and WTI $1.04 to $85.49.

Peace talks ease the war premium

Traders pointed to reports that US Vice-President JD Vance is planning direct talks with an Iranian representative, alongside progress in the Russia-Ukraine negotiations. Russian and Ukrainian negotiators agreed a major prisoner exchange at two days of talks in Abu Dhabi that ended on Wednesday, although US mediators said differences remained on territory and other major issues.

Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, said markets were falling on expectations that behind-the-scenes efforts were under way to secure a ceasefire between Russia and Ukraine and that the Iran war was unlikely to escalate before the US-China summit next week.

Oversupply worries add pressure

Rising OPEC+ output and growing US inventories also weighed on prices, feeding worries about oversupply. The falls reversed Wednesday's gains, when Brent rose 1.4% and WTI added 0.6% after both benchmarks hit two-month lows the previous day. January Brent futures were also lower in Indian trading, at $91.65, down 1.20%.

Official inventory data from the US Energy Information Administration is due later on Thursday, delayed by a day because of a US national holiday on Wednesday.