Oil Pulls Back after 2-Day Gain as US Inventories Rise

Crude oil rose toward $92 per barrel on Friday but was still on track to post a weekly loss of about 12%, 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.

Crude oil prices rose for the first time in four sessions on Thursday, gaining nearly 3% to around $90.5 a barrel after plunging more than 8% to a near two-month low in the previous session. Traders continued to assess whether the Democratic Party's gains in the US midterm elections could improve prospects for a diplomatic resolution to the conflict with Iran. Tehran is reviewing proposals delivered through regional mediators, although Washington and Tehran remain divided over the terms of a potential agreement. Meanwhile, shipping risks persist. At least five vessel-related incidents have been reported in the Persian Gulf since Sunday, with threats to commercial traffic continuing despite a recovery in crude shipments through the Strait of Hormuz. Supply conditions have improved considerably, with Gulf crude exports recovering towards pre-war levels, albeit at higher transportation costs. However, geopolitical risks surrounding these shipments remain unresolved.

Crude oil prices rose for the first time in four sessions on Thursday, climbing to around $90 a barrel after plunging more than 8% to a near two-month low in the previous session. Traders continue to assess whether the Democratic sweep of Congress in the US midterm elections could improve prospects for a diplomatic resolution to the war with Iran. US Vice President JD Vance said voter frustration over the conflict and the US relationship with Israel had contributed to the Republicans' electoral defeat. Ahead of the election results on Tuesday, President Trump said he had no immediate plans to escalate military strikes. Nevertheless, geopolitical risks to supply remain elevated despite a recovery in exports from Gulf producers. Adding to concerns, Iran's Islamic Revolutionary Guard Corps said on Thursday that two oil tankers and a tugboat had caught fire in separate incidents after allegedly attempting to navigate unauthorised routes through the Strait of Hormuz.