Oil Prices Rise as Investors Assess Iran War Developments and US Political Shift

Oil prices rose on Wednesday after a volatile trading session, as investors monitored developments in the US-Israeli war with Iran, diplomatic efforts to end the conflict and the outcome of the US midterm elections.

Brent crude futures increased by 82 cents, or 0.8 per cent, to $104.42 a barrel at 8:10 a.m. Saudi time. US West Texas Intermediate (WTI) crude gained 50 cents, or 0.5 per cent, to $96.59 a barrel, recovering from earlier losses.

The gains followed a decline in the previous session, when Brent settled at its lowest level in nearly four weeks as traders assessed prospects for ending the wars in Ukraine and Iran.

Investors were also reacting to the US midterm elections, in which Democrats secured majorities in both houses of Congress, ending Republican control for the remainder of President Donald Trump’s second term.

Priyanka Sachdeva, head of market insights at Phillip Nova, said conflicting messages from the Trump administration had made it difficult for traders to establish a clear direction for oil prices.

Military strikes against Iran have continued alongside statements from Washington playing down the possibility of further escalation, creating uncertainty over the conflict’s trajectory.

Sachdeva said some investors were taking profits and reducing speculative positions following the sharp rally in October. However, she noted that risks to oil supplies through the Strait of Hormuz remained significant.

The possibility of an unexpected decline in US crude inventories was also providing support to prices, she added.

A US official said on Tuesday that American forces had carried out what Washington described as defensive strikes on Iran’s Qeshm island, targeting surface-to-air missiles used against US assets. Another official said the operation appeared limited and did not indicate a return to major combat operations.

Markets remained focused on diplomatic efforts to end the US-Israeli war with Iran. Qatar has stepped up mediation efforts to prevent further escalation following the US elections.

However, a senior Iranian official told Reuters on Tuesday that Tehran and Washington remained far from reaching an agreement to end the conflict. Trump told the Financial Times that the United States had no immediate plans to launch another strike against Iran.

Meanwhile, US crude inventories declined by 5.27 million barrels in the week ended October 30, according to American Petroleum Institute data cited by market sources on Wednesday.

The decline was significantly different from expectations. Eight analysts surveyed by Reuters had forecast an average increase of around 880,000 barrels.

Gasoline inventories increased by 1.43 million barrels, while distillate stocks, which include diesel and heating oil, fell by 1.19 million barrels.

Haitong Futures said tight diesel inventories and the larger-than-expected rise in gasoline stocks presented a mixed picture, but the overall data were supportive of oil prices.

Investors were awaiting official inventory figures from the US Energy Information Administration, scheduled for release at 6:30 p.m. Saudi time on Wednesday.