Crude Oil Drops on Middle East Diplomacy Hopes

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.

Crude oil climbed above $101 per barrel on Wednesday, snapping a two-session decline 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. A refinery in Saudi Arabia also came under attack, underscoring heightened supply risks in the region. Meanwhile, investors 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.”

Crude oil rose toward $101 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.