Oil prices rise amid uncertainty over the war with Iran
Kyiv • UNN
The price of Brent rose to $97.56 after falling by more than 8% the previous day. Markets are assessing the impact of the U.S. elections and the prospects for war with Iran.
Brent crude oil futures rose by nearly $3 on Thursday, November 5, as investors assessed the further course of the U.S.-Israeli war with Iran after U.S. President Donald Trump’s Republican Party suffered major losses in this week’s midterm elections. UNN reports this, citing Reuters.
Details
As of 14:17 GMT (16:17 Kyiv time), Brent futures had risen by $2.94, or 3.11%, to $97.56 per barrel, while U.S. West Texas Intermediate crude futures rose by $1.73, or 1.96%, to $89.85.
"The situation in the Middle East is still unresolved, and that is why we are seeing some moderate recovery in prices at the moment," said Giovanni Staunovo, a commodities analyst at UBS.
Both prices fell by more than 8% in the previous session, reaching their lowest level since August 31.
The conflict with Iran, which Trump launched together with Israel in February, and the resulting increase in fuel prices for American consumers became the main reasons for voters’ dissatisfaction on Tuesday, when Republicans suffered a crushing defeat, the publication notes.
"Markets are assessing the impact of the midterm elections on Donald Trump’s next steps regarding the war with Iran, pricing in a greater likelihood that it will end," said June Goh, a senior oil analyst at Sparta Commodities.
"However, even greater volatility is expected ahead, as the path to full-fledged diplomacy to end the war is still fraught with unknown factors, while global strategic reserves have been severely depleted," she added.
What analysts say
Analysts note that uncertainty will persist until the new Congress, which will be controlled by Democrats, begins work in January.
In its report, Citi said it was concerned that after the midterm elections, the White House might focus on its executive powers in foreign policy and potentially escalate the conflict with Iran.
Eurasia Group lowered its estimate of the likelihood of renewed U.S. strikes on Iran from 65% to 60%, but also reduced the likelihood of a deal from 20%, as Iran is standing firm on its demands and Trump is unlikely to accept terms that would be viewed as a defeat. The likelihood of continued confrontation was raised from 15% to 30%.
Despite the recent drop in oil prices, escalation would likely lead to a sharper rise in Brent crude prices to a range of $110 to $125 per barrel, according to a Eurasia Group note.
Meanwhile, Iranian Foreign Minister Abbas Araghchi discussed the latest progress in diplomatic efforts aimed at establishing stability in the region in separate phone calls with his Saudi and Qatari counterparts, Iran’s Foreign Ministry said.
On Thursday, Iran’s Islamic Revolutionary Guard Corps reported that two oil tankers and a tugboat caught fire in separate incidents after attempts to use unauthorized routes through the Strait of Hormuz.
According to analysts, oil supplies through this key waterway for most oil shipments to the Persian Gulf have recovered to nearly pre-war levels, although at the cost of heavy losses.