Brent Rises Amid Heightened Middle East Uncertainty

Brent crude climbed above $115 per barrel on Wednesday, moving back toward four-year highs after reports emerged that the US had urged several Persian Gulf nations to prepare for a possible new military campaign against Iran following the midterm elections. Investors also closely watched Israel’s election results, which could influence the course of the Middle East conflict. Exit polls showed Prime Minister Benjamin Netanyahu running neck and neck with opposition leader Gadi Eisenkot, as vote counting remained ongoing. During the campaign, Eisenkot presented himself as a more moderate alternative to Netanyahu, emphasizing that Iran’s nuclear program must be contained, including through military action if necessary, while describing regime change as “not an achievable goal.” Meanwhile, US crude inventories fell by approximately 2 million barrels in the week ending October 23, pointing to tighter oil supplies.

Brent crude rose above $115 per barrel on Wednesday after sliding for two straight sessions, as markets monitored election results in Israel that could change the trajectory of the Middle East conflict. Exit polls indicated that Prime Minister Benjamin Netanyahu was tied with opposition leader Gadi Eisenkot, with neither bloc securing a majority and vote counting still underway. Still, the results point to weakening support for Netanyahu, a dominant figure in Israeli politics for decades who has guided the country through nearly three years of continuous conflict. Meanwhile, markets assessed renewed diplomatic efforts in the region after officials from Saudi Arabia, Pakistan, and Turkey met with Iranian leaders on Monday. Iran’s Supreme Leader Mojtaba Khamenei also called for an end to the current state of “neither war nor peace.” In the US, crude inventories dropped by 2 million barrels in the week ending October 23, signaling tighter oil supplies.

Brent crude fell to around $114 a barrel on Tuesday, as renewed diplomatic efforts raised hopes of  de-escalating tensions in the Middle East. Iran’s Supreme Leader Mojtaba Khamenei called for an end to the current state of “neither war nor peace,” signaling a possible opening for negotiations. Officials from Saudi Arabia, Pakistan, and Turkey met in Tehran on Monday and agreed to continue discussions, while Russian President Vladimir Putin was expected to meet Iranian President Masoud Pezeshkian and Qatar’s emir in Moscow. These developments improved prospects for de-escalation, although significant risks remain. Meanwhile, US crude inventories fell by 2.031 million barrels in the week ended October 23rd, defying expectations for an increase of 800,000 barrels and extending the previous week’s 4.93 million-barrel draw, adding to supply concerns. Houthi attacks on Saudi energy infrastructure and Iranian strikes on tankers in the Strait of Hormuz continued to support prices.