Oil rebounds from two-month low as uncertainty lingers over Iran war

Oil prices surged on Thursday, recovering from a two-month low as uncertainty loomed over the Iran conflict following Democrats' victory in the U.S. midterm elections. Brent crude, the global benchmark, climbed 2.47% to $96.96 a barrel, West Texas Intermediate rose 2.02% to $89.90 per barrel. Both commodities had plummeted to their lowest in two months on Wednesday, with Brent briefly touching $93. Weekly losses now stand at about 14%.

The Democratic Party's control of the House and Senate has left President Donald Trump's Iran war strategy uncertain. Despite a brief respite from high energy costs, the market remains exposed to geopolitical risks due to the lack of a peace agreement between Washington and Tehran, according to Ole Hansen, Saxo Bank's head of commodity strategy.

The Middle East tension persists with Iran's navy alleging an oil tanker struck a mine in the Strait of Hormuz, and Saudi Arabia facing missile attacks from Yemen's Houthi rebels. Iranian Foreign Minister Abbas Araghchi held calls with Saudi and Qatari counterparts to discuss regional developments and diplomatic efforts for stability.

Economist Paul Donovan from UBS Global Wealth Management predicts oil prices will likely drop further once the fighting ends, settling around $80-$85 a barrel in a postwar environment.