Brent crude prices climbed to a six-month high on Friday, as reports of attacks on commercial vessels in the Strait of Hormuz and strikes on Saudi energy facilities, combined with a diplomatic deadlock, sharply heightened market fears that Gulf tensions could escalate again after the U.S. midterm elections.
Brent crude January futures touched $118 per barrel in early Friday trading, marking a six-month high.
Trump has been weighing whether to restart strikes against Iran. According to CCTV News, Trump recently said the United States might carry out another small-scale "Epic Fury" operation. Separately, according to Global Times, the timing of the strike could be set for after the midterm elections conclude next Tuesday. At the same time, Vice President JD Vance sent a letter to Iran's top leadership this week and has so far received no response.
The stagnation of diplomatic channels and the叠加 of geopolitical risks are being transmitted to the market. Dominic Ellis, an energy expert at UBS, noted that a new round of vessel attacks in the Strait of Hormuz, attacks on Saudi energy assets, and the lack of progress in recent diplomatic contacts have together pushed Brent crude above the $117 per barrel mark. He warned that the market has not yet fully priced in the potential medium- to long-term supply impact of a Middle East conflict, and that if diplomatic progress continues to be absent, oil prices risk rising further sharply.
Iran Insists Lifting Blockade Is Prerequisite for Talks
Currently, U.S.-Iran diplomatic channels are nearly frozen. Iran's position has remained clear: Tehran will only return to the negotiating table if the United States commits to lifting the blockade on Iranian oil exports and unfreezing Iranian assets.
The letter JD Vance sent to Iran's top leadership this week has so far received no response. Meanwhile, The Wall Street Journal reported that President Trump continues to receive briefings on military options and has signaled that related actions could restart after the midterm elections.
Dominic Ellis said that regardless of the midterm election outcome, he does not believe the election will serve as a catalyst for the United States to restart Middle East diplomacy. This week, Jefferies invited Atlantic Council Middle East expert and former U.S. intelligence official Jonathan Panikoff, along with analysts Aniket Shah and Lloyd Byrne, to discuss the post-election direction of the Gulf situation. The core question points in the same direction: restart negotiations, or a new round of strikes?
Thin Supply Buffer Weakens Market Resilience
With demand-side concerns not yet dissipated, the safety cushion in global oil supply has narrowed substantially, significantly reducing the market's ability to withstand any new supply disruption.
According to Bloomberg reporter Rebecca Feng, citing the latest data from the International Energy Agency (IEA), global onshore oil inventories that can be mobilized at any time have fallen to their lowest level since at least 2016.
Data from ship-tracking agency Kpler shows that Gulf exports have exceeded the pre-war level of 23.3 million barrels per day, but Morgan Stanley analysts warned that if supplies to domestic refineries are included, overall market supply remains below last year's level.
JPMorgan energy expert Natasha Kaneva said bluntly in a research report: "As the Iran war enters its eighth month, the question of 'what is the oil price'—which should be simple—has now become surprisingly difficult to answer." Kaneva's model shows that the fair price for Brent crude is about $94 per barrel, far below the current market price of $118, a gap that reflects the market's substantial embedding of a geopolitical risk premium.
Corporate Level: Executive Withdrawals from ADIPEC Send Warning Signal
Market concerns over the Middle East security situation have spread from the price level to corporate behavior.
It is reported that senior executives from ExxonMobil and Chevron have successively withdrawn from the ADIPEC energy conference scheduled to be held in Abu Dhabi next week. This development is seen by the market as a direct response by the energy industry to the risk of escalation in the Gulf situation, and further strengthens investors' expectations that regional tensions could intensify after the midterm elections.
Dominic Ellis said he believes that pricing at the front end of the current futures curve has already reflected, to some extent, a higher probability of escalation and disruption to energy production and exports, but the market is still not fully pricing in the medium- to long-term impact of the conflict. Before there is a substantive breakthrough in diplomatic progress, the upside risk to oil prices should not be underestimated.
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