Oil Strengthens as Risk of US-Iran Conflict Looms Again

Oil prices rose again on Friday (October 30), putting them on track for a fourth consecutive monthly gain. Brent crude for December delivery stood at US$117.15 per barrel, while WTI reached US$103.79 per barrel. The market is increasingly anticipating a potential escalation in the US-Iran conflict following the US midterm elections, particularly in the wake of an attack on a tanker in the Strait of Hormuz.

Tensions escalated after the UKMTO reported that a tanker in the Strait of Hormuz was struck by an explosive device planted by a small boat. As the Strait serves as a vital artery for oil shipments from the Gulf region, the incident has reignited concerns over supply disruptions and kept a risk premium embedded in oil prices.

Diplomatic efforts remain underway, with Qatari mediators returning to Tehran to push for an agreement between the US and Iran. However, Iran has yet to respond to a letter from US Vice President JD Vance, insisting instead that any agreement must meet specific conditions set by Tehran. Consequently, the market perceives a significant risk of further escalation.

Geopolitical risks have also intensified following claims by the Iran-backed Houthi group that they attacked several facilities in Saudi Arabia, including the Ras Tanura and Rabigh refineries, as well as the Abqaiq production complex. Saudi Arabia later reported that it had successfully intercepted missiles launched by the Houthis toward the kingdom.

Newsmaker Analysis: Oil prices continue to find strong support from heightened risks of supply disruption and the ongoing, albeit uncertain, path of US-Iran diplomacy. With the US elections and developments in the Middle East conflict taking center stage, oil price volatility is likely to remain high in the coming weeks. (srh)

Source: Newsmaker.id