Oil prices declined on Thursday, reversing some of the previous session’s gains, as renewed diplomatic efforts to end the conflict involving Iran tempered concerns over potential supply disruptions amid continuing Houthi attacks in the region.

Brent crude futures fell $1.13 to $114.2 a barrel, while US West Texas Intermediate (WTI) crude futures declined $1.32 to $101.5.

The declines followed gains on Wednesday, when Brent rose 1.3 per cent and WTI advanced 3 per cent on concerns over escalating hostilities and their potential impact on regional energy infrastructure.

Market sentiment was influenced by reports of fresh US efforts to revive negotiations with Tehran. The Wall Street Journal reported on Wednesday, citing US officials and people familiar with the matter, that Vice President JD Vance had sent a letter to Iranian Security Council chief Mohsen Rezaei seeking to restart peace talks.

The diplomatic initiative comes amid uncertainty over the prospects for a negotiated settlement and concerns that the conflict could enter a new phase if current mediation efforts fail.

Qatari mediators have also presented Iran with a new draft agreement aimed at ending the war involving the US and Israel, according to an official briefed on the negotiations. However, a senior Iranian official dismissed the proposals as unacceptable, saying they did not constitute a formal offer.

Gulf countries 'alerted'

The Wall Street Journal separately reported that Washington had advised several Gulf Arab countries to prepare for the possibility of a short but intensive military campaign against Iran after the November 3 US midterm elections.

Citing people briefed on the discussions, the newspaper said the communications through diplomatic and military channels indicated preparations for a possible new round of US-Israeli strikes aimed at weakening Iran's military capabilities and increasing pressure on Tehran to negotiate.

However, President Donald Trump had not made a final decision on renewed military action, leaving open the possibility of a diplomatic settlement.