Oil falls as investors assess Mideast tensions, International Energy Agency's report

Key points

• Brent crude for December fell 1.66% to $104.31 a barrel on Thursday.
• U.S. West Texas Intermediate for November dropped 1.09% to $94.05 per barrel.
• The IEA warned that diesel market constraints could persist into next year.

Oil prices declined on Thursday as investors weighed possible supply disruptions after attacks on ships in the Strait of Hormuz and reviewed the International Energy Agency's latest monthly oil report.

Brent crude futures for December delivery fell 1.66% to $104.31 a barrel, while U.S. West Texas Intermediate futures for November dropped 1.09% to $94.05 per barrel.

Tensions in the Strait

A Singapore-registered ship was sunk in the Strait of Hormuz, raising concerns about a prolonged Middle East conflict. Singapore's maritime authority said in a statement Wednesday that such attacks are "unprovoked, unjustifiable and a breach of international law."

Iran has said it is "counting the moments" until it can start striking U.S. warships.

Such attacks are unprovoked, unjustifiable and a breach of international law.

— Singapore maritime authority

IEA report and U.S. response

The IEA's October oil report cautioned that constraints on diesel markets could continue well into next year, and that fresh attacks on Saudi Arabia threatened to derail a recovery in oil supply.

To help ease prices, the Trump administration is considering easing sanctions on "shadow fleet" vessels that transport oil and petroleum products from countries such as Russia, according to Reuters.

Firas Bechwaty, head of business development at ICM, said the lack of progress in U.S.-Iran diplomacy "leaves little immediate prospect of a full reopening of the waterway." He added that Saudi crude continues to reach international buyers through alternative routes, while emergency stock releases by IEA members provide an additional buffer, preventing a sharp rise in prices even as tensions remain elevated.