Oil Set for Sharp Weekly Rise

Crude oil prices fell toward $101 per barrel on Thursday, trimming gains from the previous session as investors assessed renewed diplomatic efforts to prevent further escalation of the Middle East conflict. Reports suggested that US Vice President JD Vance had contacted Iranian national security official Mohsen Rezaei, while President Donald Trump confirmed that negotiations were underway through mediators but acknowledged uncertainty over their outcome. Iranian Foreign Minister Abbas Araghchi also reiterated that Tehran remained open to diplomatic solutions. Despite the pullback, WTI crude has gained more than 14% this month, supported by intensifying clashes involving Saudi Arabia and Iran-backed Houthi forces, alongside continued threats to shipping through the Strait of Hormuz. However, energy flows from the region have since recovered to levels close to those recorded before the war.

Crude oil trimmed gains to settle near $102 a barrel on Wednesday after reaching as high as 103.5 earlier in the session. Escalating Middle East hostilities heightened concerns about supply disruptions. Iran-aligned Houthis attacked Aden airport and claimed a missile strike on Saudi Arabia’s largest oil refinery, which has a capacity of 550,000 barrels per day, although Saudi authorities had not confirmed the reported refinery attack. Also, there are increased fears that the US could resume military operations against Iran after the November 3 midterm elections, potentially intensifying regional instability and threatening oil flows. Meanwhile, Qatar mediators presented Iran with a new draft proposal to end the war involving the US and Israel. However, an Iranian official dismissed the ideas as unacceptable, leaving the prospects for a settlement uncertain. Supporting prices further, US crude inventories fell by 1.9 million barrels in the week ended October 23.

Crude oil climbed above $101 a barrel on Wednesday, recovering from two sessions of losses as traders assessed the risk of renewed military escalation between the US and Iran. Reports that President Donald Trump was considering a short, intense campaign after next week’s US midterm elections supported prices, although no final decision had been made. Washington reportedly urged Persian Gulf allies to prepare for possible strikes and deployed additional military forces to the region. Political uncertainty in Israel added to regional concerns, with Prime Minister Benjamin Netanyahu and opposition leader Gadi Eisenkot competing closely in an election that could leave the country without a clear governing majority. Meanwhile, repeated Houthi attacks on Saudi energy infrastructure highlighted the continuing threat to regional oil supplies. However, reports that Qatari mediators presented Iran with a new draft agreement limited gains by raising hopes of a diplomatic breakthrough.