Oil prices are heading for a steep drop this week, as traders bet that the war involving Iran could de-escalate following election losses for US President Donald Trump’s party. Still, concerns about Middle East supply tied to the conflict are preventing prices from falling further.
On Friday, Brent crude futures for January climbed $1.29, or 1.31%, to $99.58 a barrel by 0504 GMT, after briefly moving above $100 in early trading. US West Texas Intermediate futures rose 86 cents, or 0.95%, to $91.38. Both benchmarks gained for a second consecutive session.
Election results weigh on crude before renewed tanker attacks
Brent was still on course to fall 12% over the week, after the December contract expired on October 30, while WTI was set to lose 12.1%. The slide began earlier in the week, when expectations grew that Tuesday’s midterm vote could ease the US-Israeli war against Iran, now in its ninth month. The Democrats gained control of the Senate and House of Representatives from Trump’s Republicans.
Also read: Oil prices fall for fourth day as Iran war escalation risk eases
Oil fell 8% on Wednesday alone, settling at two-month lows after the Democrats swept the polls. Prices then recovered as tanker attacks surged on Wednesday and Thursday in the Gulf and the Strait of Hormuz, the main sea route for most Middle Eastern oil shipments. The attacks revived worries about supply from the region.
Analysts say Hormuz risks remain unresolved
KCM chief analyst Tim Waterer described Friday’s gain as a “technical recovery” from the sharp sell-off after the US election. He said the underlying driver was a realisation that the problem had not gone away, and that attacks in the Strait of Hormuz had not been affected by the Democratic win.
“Until there is a credible path to safer, cheaper transit through the Gulf, oil is likely to remain supported on dips and prone to sharp moves on any escalation headlines,” he said.
Iran said on Thursday that three more tankers had been attacked in the Strait of Hormuz. Data from Britain’s maritime security agency UKMTO suggested attacks on oil-carrying ships are still running close to a record pace.
