The Brent oil price reached $98.01 per barrel, equivalent to a 3.58% increase. This price rise occurred after significant declines the previous day and traders' reassessment regarding the results of the U.S. midterm elections. On Wednesday, the Brent oil price had fallen to $94.62, the lowest price since August 31.
Impact of Midterm Elections on Oil Market
The U.S. midterm elections, which resulted in a Democratic victory in both houses, led to increased speculation about a quick end to the war with Iran. This speculation resulted in an 18% decrease in Brent oil prices this week. Traders aggressively sold their positions, anticipating an imminent diplomatic agreement.
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Changes in the Oil Market
However, the outlook for a quick resolution seems significantly uncertain. The Eurasia Group has reduced the likelihood of a negotiated agreement to 10% and estimated the chance of renewed U.S. attacks at 60%. Meanwhile, transportation risks remain. Reports indicate that at least five maritime incidents have occurred in the Persian Gulf since Sunday, and threats to commercial traffic continue despite improvements in oil transport from the Strait of Hormuz.
Iran is considering proposals put forward through regional intermediaries, but Washington and Tehran still disagree on the terms of an agreement. The price drop on Wednesday was exacerbated by heavy selling in oil futures contracts. As prices approached technical selling ranges, Thursday's recovery may indicate a return of some traders to buying positions.
The physical oil market has changed significantly, with Gulf crude oil exports nearing pre-war levels, although transportation costs have risen. However, geopolitical risks surrounding these shipments remain unresolved.
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