Crude Oil: Brent Climbs as Market Weighs Renewed US-Iran Conflict Risk Against Diplomacy

Oil prices rose as traders balanced the risk of the United States and Israel potentially striking Iran again against fresh diplomatic efforts.

Brent crude advanced, with the settlement price climbing above $115 a barrel, following reports that the US had notified several Persian Gulf countries to prepare for a short, high-intensity military operation targeting Tehran.

Brent gave back some gains after the settlement, briefly falling below $114, amid reports that US Vice President Vance had contacted Iran's Supreme National Security Council secretary Rezaei in an attempt to restart peace talks.

Israel's election and next week's US midterm elections have become the focus of market attention. After more than 90% of votes were counted in Israel, Netanyahu held a slight lead over opposition leader Eisenkot, but neither side had a clear path to forming a coalition.

Warren Patterson, head of commodities strategy at ING, said the market is pricing in the risk of renewed escalation, and oil prices are especially sensitive to the Persian Gulf situation, with the focus including whether the US takes action against Iran after the midterm elections.

In addition, US crude inventories fell by 1.9 million barrels, marking a fourth consecutive weekly decline, while Midwest gasoline inventories dropped to a record low.

December-delivery WTI crude futures rose 2.9%, settling at $102.78 a barrel. December-delivery Brent crude futures rose 1.3%, settling at $115.32 a barrel.