Oil prices have reversed in light of new reports of two separate strikes in the Middle East. WTI traded at $99.24 earlier and Brent at $106.82, both after the United States dropped sanctions on Russian fuel.
This move now appears to have bought about 15 hours of lower oil prices and crude is now higher on the day, with WTI at $103.13 and Brent just above $110.
Two stories led to these gains, the first being that the Iranian navy said the United States attacked the Konarek naval base with “two light projectiles” early this morning and that two soldiers were injured.
More recently, two reports highlight that the Houthis have claimed responsibility for six attacks on Saudi Arabia in the past 48 hours, including strikes on the Aramco-owned Yanbu oil facility, the Shaybah oil field, and the Ryiadh and Abha airports. Today, Saudi Arabia canceled this year’s conference, “Davos in the Desert.”
The next question is what retaliation will be for the latest strikes from both sides. The United States had not attacked Iran in seven weeks; Trump also said there would be no attacks before the midterm elections. This one has been called small, so perhaps it is being ignored as Iran continues to focus on strikes on ships transiting Hormuz.
WTI Crude Oil Daily:
Looking at the chart, oil has been steadily climbing over the past two weeks and is now near the September 14 high of $104.95. We are getting very close to the point where a cut will be too late to help Trump in the midterms and negotiations will therefore be fruitless, despite a Qatari report released today on new proposals.
Beyond the midterm elections, the math likely points to escalation, although at this point Republicans and Democrats may want to sharpen their anti-war stances ahead of the 2028 election cycle. If Republicans suffer a brutal defeat in the midterms, Congress could increase pressure on Trump to leave Iran and find a way to reach a deal. Alternatively, the US administration could simply conclude that the blockade of Iran and periodic strikes against shipping constitute a winning long-term strategy.
What is more concerning than the short-term chart is that if we look further down the curve. In October 2027, oil prices stood at $83, up $13 since early September and above the pre-war peak. It’s the market that doubts Trump’s incessant promises that oil prices will “collapse.”
Gn bussni
