Oil set for sharp weekly drop but Middle East supply concerns provide floor

Oil prices are anticipated to experience a significant decline this week, following the recent US midterm elections which resulted in a shift of power to the Democratic party. Brent crude futures for January experienced a rise of $1.57, or 1.6%, to $99.86 a barrel on Friday, while US West Texas Intermediate futures climbed $1.10, or 1.22%, to $91.62 a barrel.

Both contracts witnessed a second day of gains. However, the Brent contract is projected to decline by 12% this week, and WTI by 12.1%, as the December contracts have expired. The market drop followed the Democrats' victory in the midterm elections, which could potentially lead to a de-escalation of the US-Israeli conflict with Iran.

Despite a 8% drop on the previous day, oil prices rebounded due to a surge in tanker attacks in the Gulf and the Strait of Hormuz, reigniting concerns about supply disruptions from the region. Iran continues to retain control over the Strait of Hormuz, and the attacks on tankers have reached almost record pace, with Iran claiming three more tanker attacks in the region on Thursday.