Brent crude held near $98 a barrel on Friday after a weekly drop of more than 12.5% on de-escalation hopes. Amos Hochstein, a former Biden energy adviser, puts the odds of renewed US-Iran war above 50/50.
Traders read the Democratic midterm sweep as a brake on the war, sending oil 8% lower on Wednesday. That repricing therefore leaves fuel buyers exposed to higher diesel, gasoline and jet fuel costs if fighting resumes.
Did the election change the Iran war plan?
Hochstein, now a TWG Global managing partner, told CNBC that renewed strikes on Iran may remain the lead policy. He believes the decision to resume fighting predated the midterms and was delayed by days.
“I think that there is a very good chance that we go back to conflict.”
Amos Hochstein, TWG Global managing partner, CNBC
US forces reportedly struck Iran’s Qeshm Island the day before the vote.
Hochstein sees three options for President Donald Trump. They are renewed war, a deal Trump dislikes, and prolonged economic pressure on Iran.
What is $98 Brent crude actually pricing?
However, attacks on ships have not paused. Iran said attacks hit three more tankers in the Strait of Hormuz on Thursday.
Data from the UK Maritime Trade Operations agency (UKMTO) suggests attacks on oil-carrying ships are running near a record pace.
Meanwhile, Iran reportedly sent a nuclear proposal to Washington through Qatar. The US still demands that Tehran give up its nuclear capabilities.
In contrast, Iran wants the US naval blockade lifted, sanctions eased and frozen assets released before it fully reopens Hormuz.
Goldman Sachs set a $105 December Brent target before the vote, citing supply disruption risk. Brent now trades below it.
“Until there is a credible path to safer, cheaper transit through the Gulf, oil is likely to remain supported on dips and prone to sharp moves on any escalation headlines.”
KCM chief analyst Tim Waterer
Brent at $98 trades under its four-year high of more than $120. Still, the level suggests traders are splitting the risk between a deal and renewed strikes.
Oil now trades on two clocks, the White House’s decisions and tanker attacks the midterms did not change.
