Midterm mist
USO•Oil prices fell sharply on hopes that a US-Iran deal could reopen the Strait of Hormuz within two days of an agreement, though major differences remain. Energy markets are likely to remain unsettled as the US midterm elections approach.
1. Oil and election uncertainty
Energy markets have responded to political signals ahead of Tuesday’s US midterm elections, but the outcome’s implications for the Middle East conflict and energy markets remain uncertain. Oil prices fell sharply on renewed hopes for a deal to end the US-Israeli war with Iran.
2. Talks and market risks
Iranian negotiators completed three straight days of talks with Qatari mediators in Doha and are reportedly working on a proposal that could reopen the Strait of Hormuz within two days of an agreement with Washington. Differences remain over Iran’s nuclear programme, sanctions relief and security issues. Secretary of State Marco Rubio said President Donald Trump had not decided whether to launch new strikes and would prefer a diplomatic solution.
3. Oil companies hold back spending
The world’s largest oil companies reported enormous profits last week after eight months of conflict-related disruption, higher oil and gas prices, and strong refining margins. Despite the windfall, they remain reluctant to significantly increase spending, signalling doubts about the industry’s long-term outlook.
