- Brent crude traded near $99 per barrel, set for a weekly decline of almost 13 percent
- Prices rebounded after midterm elections increased hopes for US-Iran conflict de-escalation
- Multiple vessel incidents occurred in the Persian Gulf, raising shipping security concerns
Brent crude oil prices edged higher on Friday, trading around $99 per barrel, but remained on track to post a weekly decline of nearly 13% amid hopes of a possible de-escalation in the US-Iran conflict.
Brent crude futures had surged 3.8% on Thursday to settle at $98.29 per barrel, while US West Texas Intermediate (WTI) crude gained 2.7% to close at $90.52 per barrel.
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The rebound followed a sharp sell-off on Wednesday, when both benchmarks plunged more than 8% to their lowest settlement levels since August 31.
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Hopes of a diplomatic breakthrough have grown after the Democrats secured control of both houses of the US Congress in the midterm elections, potentially limiting President Donald Trump's support for the war against Iran. Tehran is reportedly reviewing proposals submitted by mediators concerning its nuclear programme.
However, uncertainty over the conflict and the security of oil supplies persists. Iran has maintained that the US naval blockade of its ports must be lifted, sanctions eased and frozen assets released before it fully reopens the Strait of Hormuz.
At least five vessel-related incidents have been reported in the Persian Gulf since Sunday, according to the UK Maritime Trade Operations (UKMTO), highlighting continued risks to shipping. Iran's Islamic Revolutionary Guard Corps also said two oil tankers and a tugboat caught fire in separate incidents after attempting to use unauthorised routes through the Strait of Hormuz.
Meanwhile, Saudi Arabia issued alerts over potential threats to Yanbu, its Red Sea oil export hub, as attacks by Yemen's Iran-aligned Houthis added to regional tensions.
Ukraine's renewed attacks on Russian oil refineries have also raised concerns over the country's ability to export diesel.
Despite the recent easing in prices, the risk of further escalation remains. Eurasia Group reportedly lowered its estimate of renewed US strikes on Iran to 60% from 65%, while cutting the probability of a diplomatic deal to 10% from 20%. It raised the likelihood of a prolonged standoff to 30% from 15%.
The research firm warned that any escalation could push Brent crude prices back into the 110-125-per-barrel range.
On the supply side, Gulf crude exports have recovered to near pre-war levels, although transportation costs remain elevated.
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