Israel prepares for possible Iran escalation as US delays military action until after midterms

Oil prices surged more than 2% on Friday, reaching their highest levels since the end of April, as traders anticipated a possible escalation in the Iran war following the US midterm elections. An attack on a tanker in the Strait of Hormuz, which serves as the vital sea route for Gulf crude, added to supply concerns. Brent crude futures closed at $117.64 a barrel, while US WTI crude settled at $104.12 a barrel. Week-over-week, Brent rose 0.8% and WTI increased by the same margin.

On Friday, a tanker in the Strait of Hormuz was targeted by explosive devices attached by a small boat. The perpetrator remains unidentified, and the Strait, crucial for Gulf crude transportation, is the primary sea outlet. The US advised non-emergency government employees and their families to depart Saudi Arabia effective October 23 due to escalating safety risks, citing Houthi attacks on civilian airports and critical infrastructure.

Asian spot liquefied natural gas (LNG) prices climbed to a new multi-year high for a fourth consecutive week, driven by persistent geopolitical tensions in the Middle East and robust buying interest in Asia, alongside expectations of heightened winter demand. The average LNG price for December delivery to northeast Asia jumped from $30.50 per mmBtu to $32.50 per mmBtu. However, subdued demand in northeast Asia and indications of increasing Qatari LNG supplies somewhat capped further gains.

In Europe, the Dutch TTF gas price ended at $33.97 per mmBtu, marking a 10.7% weekly increase. Cold weather forecasts in Asia and Europe spurred winter demand, intensifying competition for LNG cargoes. Uncertainty surrounding the length of the cold spell, coupled with ongoing geopolitical tensions, contributed to market volatility.