Brent Futures Surge Over $3 as Iran War Tensions Escalate

By Adedapo Adesanya

Brent futures gained $3.42 or 3.61 per cent to trade at $98.04 a barrel on Thursday as investors reassessed the outlook for ‌the US-Israeli war with Iran, while new attacks on tankers fed worries about oil supplies.

Also, US West Texas Intermediate (WTI) crude increased by $2.33 or 2.64 per cent to $90.45 a barrel as the Democratic Party swept both chambers of the US Congress in Tuesday’s midterm elections, prompting speculation that President Donald Trump would face greater pressure to end the eight-month conflict with Iran.

The situation in the Middle East is ​still unresolved, and it fed into prices on Thursday, with market analysts noting that investors are also worried about Iran’s unchanged position regarding negotiations with the US.

Iran is reviewing proposals delivered through regional mediators, although the US and Iran remain divided over the conditions for an agreement.

Attacks on tankers in the Gulf are ​still running close to a record pace, with at least five vessels having reported incidents since Sunday, according to the UK maritime security agency UKMTO. The pace was ​similar to October when the agency said 35 vessels were hit, the most of any month of the war.

Eurasia Group, however, lowered its estimate for the chance of renewed US strikes on ‌Iran ⁠to 60 per cent from 65 per cent. It also cut the probability of a deal to 10 per cent from 20 per cent, as Iran has held firm on demands that President Trump is viewed as unlikely to accept. Eurasia Group raised the likelihood of a continued standoff to 30 per cent from 15 per cent.

The physical oil market has changed considerably as Gulf crude exports have recovered toward pre-war levels, albeit at higher transportation costs. But the geopolitical risk surrounding those shipments remains unresolved.

Saudi Arabia, the world’s biggest oil exporter, issued alerts on Thursday warning of potential danger in Yanbu, the kingdom’s Red Sea oil export hub, as Yemen’s Iran-aligned Houthis continued attacks on the kingdom ​on another front in the Iran war.

The Houthis later said they attacked King Fahd airport in the Saudi city of Dammam, although ​there was no immediate ⁠confirmation from Saudi authorities.

Iran’s Islamic Revolutionary Guard Corps said two oil tankers and a tugboat caught fire in separate incidents after attempting to use unauthorised routes through the Strait of Hormuz.

Elsewhere, Ukraine renewed attacks on Russian oil refineries, raising concerns about Russia’s ability to export diesel under a deal with President Trump.