Oil Creeps Higher Amid Uncertainty Over USA Strategy in Iran

SUBSCRIBE SEARCH ARTICLES NEWS Oil climbed as traders gauged Washington's appetite for renewed military escalation against Iran. Image by saicle via iStock

Oil climbed as traders gauged Washington’s appetite for renewed military escalation against Iran, adding fresh risk to supplies in the Middle East.

Brent futures for December, which expire Friday, settled near fresh highs of $118 a barrel. That marks a fourth monthly gain for the global benchmark. 

The US equivalent, West Texas Intermediate, closed above $104. The contract pared gains in post-settlement trading after US President Donald Trump said that peace talks are taking place, adding that “we have time, frankly.” Brent’s more-active January contract also eased. 

The remark prompted traders to unwind some hedges against a potential weekend escalation. Trump has repeatedly threatened to restart airstrikes on Iran after next week’s midterm elections. On Thursday, a top commander briefed Trump on military options, the Wall Street Journal reported. 

Diplomatic efforts have so far failed to quell the conflict in the Persian Gulf and the Strait of Hormuz, the world’s most important energy checkpoint. While regional efforts to revive negotiations were reported to have continued Friday, senior Iranian officials have signaled that Tehran would not compromise its positions on ending the war.

Brent has rallied in October — hitting a six-month high — despite a revival in oil flows through Hormuz. US Central Command’s Admiral Brad Cooper said in a video post on X that the US has helped its Gulf partners export 1.5 billion barrels of crude oil out of the region since the summer. 

Yet hostilities in the strait have flared, with two separate tanker attacks around Hormuz. One vessel was struck by an unknown projectile during an outbound transit on Thursday, while the second was approached by a small boat that attached explosive devices to its hull, according to UK Maritime Trade Operations. 

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Efforts toward regional diplomacy have continued. A Qatari delegation headed by a senior adviser to Qatar’s prime minister was in Tehran Friday for talks and consultations with senior Iranian officials, Iran’s state-run IRNA reported.

Still, one of the country’s top negotiators, Parliament Speaker Mohammad Bagher Ghalibaf, suggested that the Islamic Republic’s positions on ending the war would not be compromised. His remarks followed confirmation from Tehran that officials had received a letter sent by US Vice President JD Vance, which the WSJ reported as a bid to revive the nations’ peace negotiations.

Low inventories and tight supplies of refined products have also supported prices, in part following waves of Ukrainian attacks on Russian processors. European diesel futures edged higher as Ukrainian forces were said to have struck a refinery in Russia’s Samara region after a pause that lasted around two weeks and supported a partial recovery of the nation’s refining operations. Meanwhile, Moscow’s forces carried out a strike against Ukraine overnight.

Prices:

• WTI for December delivery gained 2.1% to settle at $104.12 a barrel in New York.
• Brent for December settlement added 2.4% to settle at $117.64 a barrel.
  • The January contract rose 2.4% to settle at $113.43 a barrel.

Traders are eyeing next week’s US midterm elections as they parse the trajectory of the war. Ahead of the contests, national polls show that the handling of the war in Iran is unpopular, with many voters unhappy about rising living expenses. 

The Trump administration on Friday awarded contracts for nearly 41 million barrels from the nation’s emergency reserve, the latest in a series of measures aimed at tackling soaring fuel costs. 

The elections “represent the next major geopolitical catalyst for oil markets,” ANZ Group Holdings Ltd. strategists Daniel Hynes and Soni Kumari said in a note. “The possibility of renewed hostilities after the vote has increased uncertainty around an already fragile physical market.”

In Israel, Prime Minister Benjamin Netanyahu and his allies secured 53 seats in the general election held this week, ahead of the main opposition’s bloc of 48 but short of a majority allowing them to rule without further backing.

“The inconclusive election result is going to prolong uncertainty over the conflict with Iran, rather than meaningfully reducing the risk of renewed escalation,” said Emily Ashford, head of energy research at Standard Chartered.

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