Oil tops $114 as traders brace for Iran escalation after US midterms

Oil prices surged by over 2 per cent on Friday (Oct 30), reaching their highest levels since early May, as traders anticipated potential escalation in the Iran conflict following the US midterm elections. Brent crude futures for December settled at US$117.64 a barrel, marking a 2.4 per cent increase from the previous day's close.

The January contract also saw a rise of US$2.63 to reach US$113.43. Meanwhile, US West Texas Intermediate (WTI) crude futures climbed by US$2.12 or 2.1 per cent to US$104.12 for the month. Traders remain focused on the flow of oil out of the Middle East and the likelihood of a US-led military response. A small boat attached explosives to a tanker in the Strait of Hormuz, marking the first successful strike of its kind since the US-Israeli war with Iran began in February.

The attack highlighted supply risks, as the Strait of Hormuz serves as the primary shipping route for Gulf crude and fuel. Yemen's Iranian-backed Houthi rebels claimed responsibility for attacks on Saudi oil refineries and facilities, while Saudi Arabia's crude exports increased in October despite ongoing threats from Iranian-backed militants.

The US oil rig count rose by two, and US crude oil output increased in August. However, demand for crude oil and petroleum products declined. Libya's National Oil Corporation reported that an armed group shut a valve on the main Hamada crude oil pipeline, suspending the flow of around 15,000 barrels a day.