- Oil prices are heading for a fourth consecutive monthly gain as tensions between the United States and Iran threaten supply.
- An attack on a tanker in the Strait of Hormuz has heightened concerns about disruptions to Gulf oil shipments.
Oil prices rose on Friday as traders weighed the risk of further conflict between the United States and Iran. The increase followed an attack on a tanker in the Strait of Hormuz, which heightened concerns about global oil supplies.
Brent crude futures for December delivery gained $2.27, or 1.98%, to $117.15 per barrel at 0845 GMT. The contract expires on Friday. Meanwhile, the more-active January contract rose $2.19 to $112.99.
Similarly, US West Texas Intermediate (WTI) crude futures climbed $1.79, or 1.75%, to $103.79 per barrel.
For October, Brent was on course to gain 13%, while WTI was heading for a 15% increase. Both benchmarks were set for their fourth consecutive monthly gains.
Ole Hansen, head of commodity strategy at Saxo Bank, said investors were increasingly concerned as the US midterm elections approached. He added that some investors and analysts expected US attacks on Iran to resume after the elections.
The United Kingdom Maritime Trade Operations (UKMTO) reported the tanker attack on Friday. A small boat had attached explosive devices to the vessel in the Strait of Hormuz. However, authorities had not identified those responsible.
The strait serves as a major shipping route for Gulf crude oil and fuel supplies. Consequently, continued attacks around the waterway have raised fears of further supply disruptions.
Middle East tensions raise supply risks
Qatari mediators returned to Tehran on Friday to support efforts towards a US-Iran agreement. An official briefed on the talks confirmed the visit to Reuters.
However, Giovanni Staunovo, a commodity analyst at UBS, said the risk of escalation and supply disruption remained high. He also noted that Iranian officials remained cautious about reaching a short-term agreement.
Meanwhile, Yemen’s Iran-backed Houthi militants claimed attacks on several Saudi sites on Thursday. Their targets included the Ras Tanura and Rabigh refineries and an Aramco production facility in Abqaiq.
In response, a Saudi-led coalition said it intercepted a Houthi cruise missile heading towards the kingdom’s western region.
Separately, US President Donald Trump said Vice President JD Vance had contacted Iran about obtaining medical supplies. This followed US media reports that Vance had written to Iran’s top security official to revive peace talks.
Iran received Vance’s letter but had not responded, the semi-official Tasnim news agency reported. The agency added that Tehran wanted Washington to meet its conditions for an agreement.
Meanwhile, security concerns have affected industry participation in regional events. ExxonMobil and Chevron cancelled plans for their executives to attend the United Arab Emirates’ biggest oil show next week. Two sources familiar with the developments told Reuters about the cancellations.
Elections add to market uncertainty
Oil prices could become more volatile in the coming weeks as Israel prepares for its parliamentary election. The US midterm congressional vote could also influence market sentiment.
According to a Saxo Bank briefing in Singapore on Thursday, the uncertainty makes price forecasts difficult.
Nevertheless, the bank expects crude to trade between $70 and $90 per barrel after the conflict ends. Before the war, prices ranged between $60 and $70 per barrel.
The bank cited the risk of renewed hostilities and the need to replenish oil inventories as reasons for the higher expected range.