Oil falls as Israel embargo concerns fade, Venezuela sanctions to ease

Oil prices fell on Thursday, reversing gains in the previous session, after OPEC showed no signs of supporting Iran's call for an oil embargo on Israel and as the United States plans to ease Venezuela sanctions to allow more oil to flow globally.

Brent futures for December fell 0.3 percent, or 29 cents, to $91.21 a barrel. US West Texas Intermediate (WTI) futures for November, which expire on Friday, was nearly flat at $88.34 per barrel, up 2 cents from its settlement price.

The more active December WTI contract fell 0.2 percent, or 13 cents, to $87.14 a barrel at 0645 GMT.

Oil prices climbed about 2 percent in the previous session on concerns about disruptions to global supplies after Iran called for an oil embargo on Israel over the conflict in Gaza and after the US, the world's biggest oil consumer, reported a larger-than-expected inventory draw, adding to already tight supplies.

The Organization of the Petroleum Exporting Countries (OPEC) is not planning to take any immediate action on OPEC member Iran's call, sources told Reuters, easing concerns over potential disruptions.

Israel imports about 250,000 barrels per day (bpd) of oil, mainly from Kazakhstan, Azerbaijan, Iraq and African countries, according to Citi analysts in a note.

"We believe an embargo from Kazakhstan and Azerbaijan, a strong Israeli ally, is unlikely," they said.

There was also a pullback in prices as US President Joe Biden's visit to Israel concluded without any further escalation in the Israel-Hamas conflict, said CMC Markets analyst Tina Teng.

"But the market is still under upside pressure amid the geopolitical tensions," she said.

Still, prices were pressured by the announcement that US issued a six-month license authorizing transactions in Venezuela's energy sector, an OPEC member, after a deal was reached between the Venezuelan government and the country's political opposition to ensure fair 2024 elections.

Venezuela's oil flows could help to ease global oil prices, up amid the Israel-Hamas conflict, sanctions on Russia and OPEC+ decisions to reduce output, but Venezuela needs investments to boost output following years of sanctions.

Japan, the world's fourth-largest crude buyer, on Thursday urged Saudi Arabia and other oil producing nations to increase supplies to stabilize the global oil market, as rising fuel prices amid the conflict could impact the global economy.

US crude oil and fuel inventories dropped last week on rising demand for diesel and heating oil, according to data from the Energy Information Administration. Distillate fuel stockpiles fell by 3.2 million barrels in the week to Oct. 13 to 113.8 million barrels, EIA data showed.

Crude inventories fell by 4.5 million barrels to 419.7 million barrels, while gasoline fell by 2.4 million barrels to 223.3 million barrels.

Supply may tighten further as Russia's oil exports via its western sea ports in November are seen falling by some 300,000 bpd as domestic refineries are expected to raise runs as seasonal maintenance ends, sources told Reuters.