Oil below $92 amid hopes of peace talks

Oil prices edged lower by more than $1 on Thursday as investors increasingly hopes for peace talks to resolve the Middle East conflict as well as the much-longer lasting Russia-Ukraine war.Brent crude futures fell more than $1 to trade below $92 per barrel, while US West Texas Intermediate (WTI) crude futures also lost over $1 to trade below $86 per barrel on Thursday morning. This comes after Brent crude rose over 1% on Wednesday after hitting two-month lows in the previous day.Russian and Ukrainian negotiators have agreed to a major prisoner exchange during their peace talks held over two days in Abu Dhabi, although US mediators said differences remained on other major issues, including territory. Ukrainian President Volodymyr Zelenskyy said his country hoped to achieve concrete results on resolving the war this year.Also read | India's battered rupee finds an unlikely rescue party in cheaper oil and Wall Street's AI routBack in the Middle East, Iranian security chief Mohsen Rezaei said the government will not allow even a single particle of enriched nuclear material to leave Iran and there will be consequences if the US launches new strikes. The US meanwhile has said that nuclear issues must be part of any initial negotiations with Iran aimed at ending the eight-month-old war, while US officials downplayed the need for further military strikes.Meanwhile, OPEC+ crude oil production jumped in October, driven by a sharp increase in output from Saudi Arabia despite continued disruption to shipments through the Hormuz Strait. US crude stocks jumped by 9 million barrels in the latest week, Reuters quoted market sources as saying, citing data from the American Petroleum Institute.Where are oil prices heading for?While oil prices have dropped from their multi decade highs which they hit earlier this year, analysts remain cautious amid the seesaw political game in the Middle East. Goldman Sachs recently raised its oil price forecasts, citing increasing risks to global supplies. The investment bank warned that Brent crude could climb to $140 per barrel in 2027 if oil production across the Gulf region remains significantly below its 2025 average.Goldman Sachs recently raised its oil price forecasts, citing increasing risks to global supplies. The investment bank warned that Brent crude could climb to $140 per barrel in 2027 if oil production across the Gulf region remains significantly below its 2025 average.Also read | India in a 'sweet spot' amid oil volatility and currency dynamics: Kotak Neo's Anindya BanerjeeIn an upside scenario, Brent crude could reach $140 per barrel and average around $130 in 2027 if Gulf oil production remains 3.5 million barrels per day below its 2025 average, Reuters reported, citing Goldman Sachs' projections.Goldman Sachs expects oil markets to incorporate a higher geopolitical risk premium, given the possibility of disruptions to Middle Eastern supplies, the historical duration of major supply shocks and the challenges involved in securing a lasting diplomatic breakthrough.JPMorgan analysts also highlighted the uncertainty surrounding the conflict, saying it remained difficult to predict how the war would unfold. At the outset, the bank had expected the US administration to avoid crossing certain economic thresholds. However, seven months into the conflict, several of those thresholds have been breached, while a clear strategy to bring the war to an end has yet to emerge.Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.