U.S. and Iran both want talks – wielding the threat of renewed war as a bargaining chip

Oil prices surged by over 2 percent on Friday, indicating the start of a fourth consecutive monthly increase, as a tanker experienced damage in the Strait of Hormuz and the United States hinted at the possibility of reigniting hostilities with Iran. Brent, the benchmark for two-thirds of the world's crude, rose 2.37 percent to $117.56 a barrel at 7.32 pm UAE time, while West Texas Intermediate, the gauge tracking U.S. crude, climbed 2.13 percent to $104.17 a barrel.

Over the week, Brent is projected to increase by 0.64 percent, and WTI by nearly 1 percent. On a monthly basis, the benchmarks are poised to surge by approximately 15 percent and 12 percent, respectively.

Iran's Islamic Revolutionary Guard Corps reported on Friday that an oil tanker struck a naval mine while attempting to navigate an unauthorized route in the Strait of Hormuz. This followed another tanker that was hit on Thursday night, which sustained damage caused by explosives attached to its hull via a small boat, not a projectile as initially reported, according to the UK Maritime Trade Operations agency.

Meanwhile, U.S. President Donald Trump stated on Friday that he believed the war with Iran, which has been ongoing for nine months, would conclude soon, without providing further details on how. His remarks come in the lead-up to the crucial U.S. midterm elections on November 3. Trump had previously cautioned that Washington would not strike Iran before the polls, leading investors to anticipate potential attacks in the near future.

On Friday, Qatari mediators returned to Tehran as part of ongoing attempts to reach a deal between the U.S. and Iran, according to an official briefed on the discussions. However, Iran did not publicly comment on the draft at that time. An Iranian official conveyed to The National that Iran "welcomes any efforts aimed at negotiations, talks, or collective consultation."

Fears of U.S. strikes on Iran contributed to upward pressure on crude, as supply risk premiums remained elevated despite earlier diplomatic outreach efforts, stated Ryan McDaniel, president of Duncan Oil Company.