Oil rises as investors weigh risk of Iran war escalation
USO•Brent crude futures rose 0.36% to $94.96 a barrel, while U.S. West Texas Intermediate fell 0.31% to $87.85 as investors weighed the risk of further escalation in the Iran war. Both benchmarks had tumbled more than 8% in the previous session.
1. Prices move unevenly
Brent futures rose 34 cents to $94.96 a barrel as of 0825 GMT on Thursday, while U.S. West Texas Intermediate crude futures fell 27 cents to $87.85 in choppy trade. Both benchmarks had dropped more than 8% in the previous session, settling at their lowest since August 31.
2. War outlook remains uncertain
Investors weighed how the U.S. midterm election results could affect President Donald Trump's next steps in the war with Iran. Eurasia Group lowered its estimate for renewed U.S. strikes to 60% from 65% and the probability of a deal to 10% from 20%, while raising the likelihood of a continued standoff to 30% from 15%. It said escalation could push Brent to $110-$125 a barrel.
3. Supply and inventories
Iran's Islamic Revolutionary Guard Corps said two oil tankers and a tugboat caught fire in separate incidents after attempting to use unauthorised routes through the Strait of Hormuz. Shipments through the waterway have recovered to close to pre-war levels, analysts said, and JPMorgan estimated the global oil market had returned to a surplus of 1.1 million barrels per day in September and 1.4 million in October. U.S. crude, gasoline and distillate inventories fell last week as demand reached its highest in a year, the Energy Information Administration said.
