Brent Crude Heads for Nearly 50% Monthly Gain

Brent crude wavered near $98 a barrel on Friday, trimming earlier losses as investors weighed the risk of renewed US-Iran military escalation against prospects for a diplomatic breakthrough. Investors are assessing whether the end of the US midterm elections could pave the way for renewed action against Iran, potentially threatening Middle East oil supplies. Iran reported attacks on oil tankers in the Strait of Hormuz on Thursday, while UKMTO data indicated vessel attacks were continuing at a near-record rate. Hopes for a diplomatic resolution emerged after Iran reportedly sent a nuclear proposal to Washington through Qatar. Significant obstacles remain over Iran’s nuclear programme, with the US demanding that Iran give up its nuclear capabilities. Meanwhile, Iran demands the lifting of the US naval blockade, sanctions relief and the release of frozen assets before fully reopening the Strait of Hormuz. Brent plunged over 12.5% for the week.

Brent crude fell below $98 a barrel on Friday, down more than 13% this week, the steepest decline since March 2020, as hopes of a diplomatic breakthrough in the Middle East eased concerns over supply disruptions. US President Donald Trump discussed de-escalation efforts with Qatar’s Emir Sheikh Tamim bin Hamad Al-Thani, while Tehran is reportedly reviewing proposals from mediators concerning its nuclear programme. A potential resolution to the conflict could allow more crude exports from the region. However, significant obstacles remain, as Iran is demanding the lifting of the US naval blockade, sanctions relief and the release of frozen assets before fully reopening the Strait of Hormuz. Meanwhile, attacks on oil-carrying vessels continue, with UKMTO data indicating that incidents remain close to record levels.

Brent crude rose above $99 per barrel on Friday but was still on track to post a weekly loss of more than 11%, driven by optimism over a potentially quicker resolution to the Middle East conflict following a Democratic sweep in the US midterm elections, although uncertainties persist. Democrats secured control of both houses of Congress, potentially limiting President Donald Trump’s support for the war against Iran. Tehran is reportedly reviewing proposals submitted by mediators regarding its nuclear program, but maintained that the US naval blockade of its ports must be lifted, sanctions eased and frozen assets released before it fully reopens the Strait of Hormuz. Meanwhile, at least five vessel-related incidents have been reported in the Persian Gulf since Sunday, highlighting continued risks to maritime shipping. Still, conditions have improved significantly, with Gulf crude exports recovering to near pre-war levels, although transportation costs remain elevated.