West Texas Intermediate retreats from five-month highs to trade near $102.00

• After touching a five-month high of 104.00 on Friday, WTI retreated.
• Reports that the US has approached Iran directly to revive peace negotiations have eased concerns over oil supplies.
• Oil prices retain underlying support from threats that US airstrikes could restart after the forthcoming midterm elections.

At around $102.20 per barrel in early European trading on Friday, West Texas Intermediate (WTI) oil has surrendered part of its daily advance. Renewed diplomatic initiatives in the Middle East have eased pressure on global energy markets, prompting crude to retreat from the five-month high of 104.00 recorded earlier in the session.

In a bid to revive peace negotiations, US Vice President JD Vance contacted Mohsen Rezaei, Secretary of Iran's Supreme National Security Council, according to a Wall Street Journal report. US President Donald Trump said he had authorised Vance's approach and noted that Iran required help with medical supplies and other essential resources.

The prospect of renewed US military strikes against Iran could nevertheless lend further support to oil prices. President Trump has recently received a briefing from a senior commander on possible military options. He has also repeatedly warned that airstrikes on Tehran could restart after the forthcoming midterm elections.

A gain of nearly 14% in October for the US oil benchmark reflects the continuing US-Iran conflict and escalating clashes between Saudi Arabia and Iran-backed Houthi forces, despite the recent diplomatic initiatives. Tankers remain exposed to attacks and threats to shipping through the Strait of Hormuz are still elevated. Even so, regional crude exports have recovered to close to prewar levels, with producers quietly moving oil cargoes through the strategically important passage.

Crude sentiment weakens as TD Securities highlights pressure from deal headlines

TD Securities attributes continuing pressure on the crude complex to the fact that "persistent headlines of deal talks are weighing on the crude oil market," as a steady flow of reports about possible agreements curbs bullish momentum. Underlying fundamentals nonetheless remain in focus.