Tensions in the Middle East have escalated sharply, with international oil prices hitting a multi-month high on Friday, as geopolitical risk premiums are being repriced at a visible pace.
Brent crude touched an intraday high of $117.45 per barrel on Friday, breaking through that threshold for the first time since April, with a monthly gain exceeding 10%, eventually settling at $116.72. The core driver behind this rally is the sharply rising market expectation that US-Iran conflict could re-escalate after the US midterm elections — Trump on the same day both hinted at possible renewed military action against Iran and signaled that "the war can end quickly," placing the two statements side by side, making it increasingly difficult for markets to gauge policy direction.
Meanwhile, Iran has been sending a series of hardline signals: the Revolutionary Guard announced that two supertankers struck mines in the Strait of Hormuz, involving a combined total of more than 4.5 million barrels of crude oil; according to Reuters, a senior Iranian security official revealed that Iran has drawn up detailed plans to strike undersea communications cables in the Gulf region, to be implemented immediately if the US and Israel launch another attack. DoubleLine portfolio manager Bill Campbell said: "You are heading into a weekend full of extreme uncertainty."
Panic in the energy market has spread to broader asset classes. The US five-year breakeven inflation rate rose 8 basis points to 2.47% on Friday, the 10-year Treasury yield edged higher to 4.99%, and the S&P 500 fell 0.5%.
RBC Capital Markets global head of commodity strategy Helima Croft said: "Oil keeps rising because the trajectory points to near-term military escalation in the Middle East. The slogan of 'ending quickly' cannot outweigh actual missiles and artillery." Rapidan Energy President Bob McNally warned that if the conflict spirals out of control and causes significant damage to key oil infrastructure, oil prices could rapidly surge toward $150.
Trump's Contradictory Statements Leave Policy Direction Highly Uncertain
Trump's remarks on Friday were full of contradictory tension, making it difficult for markets to form stable expectations.
According to CCTV News, Trump said at a rally in Florida that day that the US might take military action against Iran again, "we might do another small-scale 'Epic Fury' operation." The US Department of Defense named the military strike launched by the US and Israel against Iran on February 28 this year as "Operation Epic Fury." Trump's latest remarks mean that, with the war lasting nearly eight months, the White House still has not ruled out the possibility of further military action.
However, according to media reports, Trump also said during an interview with reporters on the South Lawn of the White House the same day that the US could end the war against Iran quickly, but then immediately raised a question: "Do we finish it completely, or just let it fade away?" He also said that oil is being transported through the Strait of Hormuz and that the US "is getting everything we want."
The juxtaposition of these two statements reflects the deep contradictions in current US policy toward Iran: on one hand, Trump hopes to force Iran to make concessions through military and economic pressure; on the other hand, the ongoing war has also driven up energy costs, increasing domestic political pressure in the US. According to Reuters, rising fuel prices are becoming an important political challenge ahead of the US midterm elections in November.
According to media reports, Trump is facing sharply divergent paths of advice: Treasury Secretary Bessent believes that Iran's economy is on the brink of collapse and that blocking the Strait of Hormuz combined with sanctions would be enough to force Tehran back to the negotiating table; Israeli Prime Minister Netanyahu advocates that another round of devastating military strikes would be enough to topple the regime. According to reports, the Trump administration currently appears to be considering combining both approaches, betting that "economic strangulation plus a military blow" can trigger regime change.
According to media reports citing informed officials, Trump is considering restarting military action shortly after the midterm elections in the form of several days of concentrated strikes, with potential targets reportedly including Iran's missile and drone arsenals, energy infrastructure, and nuclear facilities.
However, Danny Citrinowicz, a former Israeli intelligence official focused on Iran, issued a warning: "You cannot plan a three-day war, because this is not a unilateral decision — you cannot control how Iran responds." He said Trump is "eager to find an option that can get him out of this predicament."
Post-Midterm Strike Plans Emerge, Whether Trump Will Approve Remains Uncertain
According to Xinhua News Agency citing a report by the US New York Times on the 21st, US and Israeli militaries have drawn up specific plans to strike Iran again after the US congressional midterm elections in November, but it remains uncertain whether Trump will approve the implementation of this plan.
According to media reports, informed officials revealed that Trump is considering restarting military action against Iran within days after the midterm elections, with potential strike targets covering Iran's missile and drone arsenals, energy infrastructure, and nuclear facilities. An outside adviser said, "Economic pressure is working, and we believe Iran is approaching a tipping point," and a new round of strikes "will push them over."
During US Defense Secretary Hegseth's visit to Israel this week, he already discussed a new round of strike options with Israeli Prime Minister Netanyahu. Israeli television previously reported that Netanyahu had repeatedly urged Trump to launch strikes before Israel's election on Tuesday this week and the US midterm elections, though Netanyahu's office reportedly denied this claim.
The UK Financial Times cited a senior executive at a major commodities trading firm as saying that the market previously viewed a return to a more intense phase of war as "unimaginable," but oil prices have now reflected this expectation.
"Everyone is reading the signals and believes that escalation will either come before the midterm elections due to actions by Iran or Israel, or after the elections — and Trump himself has said he would do so."
Iran Unveils "Father of All Bombs," Deterrence Escalates to Undersea Cables
Iran has been sending a series of hardline military signals this week, with the scope of deterrence expanding from traditional military targets to critical infrastructure.
On the military level, Iranian Islamic Revolutionary Guard Corps spokesman Hossein Mohebi said on the 21st local time that Iran is preparing to unveil a new weapon called the "Father of All Bombs" in response to the US's earlier use of the "Mother of All Bombs." "We are preparing to unveil the most powerful bomb ever... this is something new we are showing our enemies," Mohebi said, without providing further technical details. Mohebi also said that after the "12-Day War" between Iran and Israel broke out in June 2025, Iran's missile numbers increased by 1.5 times, with improvements in range, destructive power, and strike accuracy.
On the communications infrastructure level, according to media reports on October 23, two senior Iranian security officials revealed that if the US and Israel attack Iran again, the Iranian government has already drawn up detailed plans to strike undersea communications cables in the Gulf region. The political deputy of the IRGC commander-in-chief, Yadollah Javani, had previously named seven major fiber-optic cables on the seabed of the Strait of Hormuz as potential "new targets." One of the officials also warned that Iran might try to prevent repair work after cable damage to extend communication disruptions, and that countermeasure targets would no longer be restricted by previously so-called "red lines."
The significance of this threat lies in the fact that the impact of a potential conflict may no longer be limited to oil production and maritime transport. International Telecommunication Union data shows that undersea cables carry about 99% of global internet traffic, but Alan Mauldin, research director at telecom research firm TeleGeography, said that international bandwidth passing through the Strait of Hormuz accounts for less than 1%, so even if related cables are damaged, the impact on the global internet as a whole may be limited, though Gulf states and countries and companies relying on those routes would face more direct communication disruption risks.
Strait of Hormuz Shipping in Crisis, Tanker Mine Incident Shakes Markets
The shipping security risk in the Strait of Hormuz rose sharply this week, becoming one of the direct triggers for the oil price surge.
According to CCTV News, on October 23 local time, the Iranian Islamic Revolutionary Guard Corps Navy announced that two supertankers attempting to illegally cross the southern Strait of Hormuz struck mines earlier that day, with explosions and fires paralyzing the engine rooms of both vessels, forcing crew members to abandon ship and escape, with the two tankers carrying a combined total of more than 4.5 million barrels of crude oil. It should be noted that the above account remains a unilateral statement from Iran, and the vessel names, specific damage conditions, and whether crude oil leaked still await independent verification.
According to media reports, the IRGC Navy previously also announced that its forces tracked and simultaneously hit four vessels suspected of involvement in illegal oil transfers in the northern Persian Gulf on Wednesday, setting them on fire; another three vessels collided with mines west of the Strait of Hormuz. Iranian state television said on Thursday that a total of seven tankers were attacked or struck mines this week.
The UK Financial Times cited Saxo Bank head of commodity strategy Ole Hansen as saying:
"The market is increasingly concerned that further attacks could damage production, processing, or export infrastructure, causing disruptions that cannot be easily resolved by changing routes."
Nevertheless, the Financial Times cited preliminary data from ship-tracking agency Kpler showing that Gulf oil-producing countries excluding Iran exported more last week than the pre-war average, though data from other tracking agencies showed flows remained below that threshold. Some Gulf oil producers are accelerating exports before the situation worsens further, but their ability to increase shipments is limited by the number of available tankers.
Inflation and Markets: Energy Shockwaves Already Spreading
The chain reaction from soaring oil prices has begun to transmit to broader financial markets.
Brent crude's April 2027 contract was still trading above $100 on Friday, indicating traders expect high oil prices to persist far longer than previously anticipated. Diesel is currently trading at about $200 per barrel, and commodities trading executives warn that if the conflict re-escalates, diesel prices could surge to $250 or even higher.
On the inflation expectations front, the US five-year breakeven inflation rate rose 8 basis points to 2.47% on Friday. DoubleLine portfolio manager Bill Campbell said: "We continue to expect inflation to remain sticky."
Rising energy costs will inject a new variable into inflationary pressure less than two weeks before the US midterm elections, posing a thorny political challenge for Republicans. The core question currently facing the market is not only whether the US and Iran will resume negotiations or exchange fire again, but also whether commercial shipping through the Strait of Hormuz will continue to be obstructed, whether the related tanker incidents can be independently confirmed, and whether potential countermeasures will further expand from military targets to energy and communications infrastructure — these factors will jointly determine the actual impact of Middle East risks on international crude oil prices and global supply chains.
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