Crude oil prices are heading towards a significant weekly decline, with both Brent and West Texas Intermediate (WTI) down 12% since Monday. This price drop follows the results of the U.S. midterm elections, which have raised hopes for a swift end to the war in the Middle East.
Analysis of Crude Oil Prices
Currently, the price of Brent oil has reached $99.42 per barrel, and the price of West Texas Intermediate oil has reached $91.24 per barrel. These prices have increased compared to the close on Thursday, indicating the impact of new attacks on tankers in the Strait of Hormuz. Reports indicate at least five incidents in the Persian Gulf since Sunday, creating threats to commercial traffic.
Read more: Oil prices rise following developments in the Middle East
Factors Affecting the Oil Market
Attacks on tankers and doubts about the prospects for peace between the U.S. and Iran, despite the Democrats' victory in the midterm elections, have resulted in relative price stability. Commodity experts at ING have stated in a note that “if tensions do not escalate, the oil market will gradually return to the risky realities that have emerged in recent months, and oil flows from the Persian Gulf will be well maintained.”
However, the absence of escalation is only one of two options available to President Trump. The other option is an increase in tensions, which could keep prices at high levels. Senior analyst at KCM Trade, Tim Waterer, has noted that “as long as there is no viable solution for safe and cheap passage through the Persian Gulf, oil prices are likely to be supported during declines and vulnerable to any escalation headlines.”
Additionally, Alex Kuptsikovich, senior market analyst at FXPro, pointed out that “the Republicans' defeat in the elections does not mean that conflicts in the Middle East will not escalate.” He referenced the events of 2006 and the Iraq War, during which Congress was also under Democratic control, but this did not significantly change U.S. actions in the Middle East under President George Bush.
Read more: Iran opened the Strait of Hormuz to China and India · Oil prices drop following electoral changes in Iran
