Oil prices strengthened on Thursday (Nov 5) for the first time in four sessions. Brent crude rose to around US$95.40 per barrel, while WTI hovered near US$89.50 per barrel—a recovery following a sharp decline of over 8% that had pushed both benchmarks to their lowest levels in nearly two months.
The rebound comes as investors assess whether the Democrats' significant gains in the U.S. midterm elections might improve the prospects for a diplomatic resolution to the conflict with Iran. The election outcome is seen as potentially limiting the Trump administration’s political maneuvering room to further escalate military action.
U.S. Vice President JD Vance noted that voter dissatisfaction regarding the conflict with Iran and the U.S. relationship with Israel contributed to the Republican Party's losses. Previously, Trump had also stated that he had no immediate plans to intensify military strikes.
Nevertheless, risks to oil supply remain elevated, even as exports from Gulf-producing nations begin to recover. The market remains wary of potential disruptions to energy shipments should the conflict intensify once again.
These concerns were compounded after Iran’s Islamic Revolutionary Guard Corps (IRGC) reported that two oil tankers and a tugboat caught fire in separate incidents, allegedly while attempting to navigate through unofficial routes in the Strait of Hormuz.
The Strait of Hormuz serves as a critical artery for oil shipments from the Gulf region. Any disruption to this passage could hinder global supply and once again drive up the geopolitical risk premium embedded in oil prices.
Newsmaker Analysis: The current rebound in oil prices reflects both a market correction following a sharp sell-off and lingering concerns regarding supply risks. While hopes for U.S.-Iran diplomacy could temper price increases, any fresh escalation around the Strait of Hormuz has the potential to push oil prices higher once again. (arl)
Source: Newsmaker.id