Fears of US-Israel attack on Iran after midterms drive oil surge; WTI tops $100; US ambassador says strike possible this weekend; Iran hardens stance, tightens grip on Strait of Hormuz

US President Donald Trump arrives at Florida International Airport on Friday (local time). [AP]
US President Donald Trump arrives at Florida International Airport on Friday (local time). [AP]

Global oil prices surged Friday (local time) amid growing fears that the US-Iran conflict could escalate after the American midterm elections.

Brent crude for December delivery closed at $116.72 per barrel on the London ICE Futures Exchange, up $3.55, or 3.14 percent, from the previous session — its highest level in six months since April.

The contract touched $117 per barrel during trading before settling in the $116 range. Prices are up about 20 percent from early September and have surged more than 90 percent this year.

West Texas Intermediate for December delivery settled at $103.27 per barrel on the New York Mercantile Exchange, up $3.80, or 3.82 percent.

The recent rally in oil prices has been driven by concerns that the United States and Israel could resume strikes against Iran after the November midterm elections.

The New York Times reported Wednesday that the US and Israel had drawn up plans to attack Iran again after the midterms.

The two countries are considering strikes on Iran's energy infrastructure, nuclear facilities at a site known as "Pickaxe Mountain," and its missile and drone capabilities.

There are also indications that the US could resume attacks on Iran as early as this weekend.

Tom Barrack, the US ambassador to Turkey and special envoy for Syria and Iraq, said "of course" when asked in an interview with online broadcaster Mario Naufal on Friday whether an attack on Iran could come this weekend.

Iran has signaled it will respond forcefully to any renewed US strikes. It has been stepping up attacks on oil tankers passing through the Strait of Hormuz.

Iran-aligned Houthi rebels in Yemen have also expanded their attacks on Saudi Arabia, and the US has begun withdrawing some diplomats and their families from the region.

Global crude inventories are also shrinking.

The US Energy Information Administration said in a report released Oct. 6 that global oil stocks fell by an average of 1.9 million barrels per day in the third quarter. It projected inventories would continue to decline by an average of 700,000 barrels per day in the fourth quarter.

The oil price spike is adding to inflation concerns in the United States.

The yield on the 10-year US Treasury note had plunged below 5 percent the previous day as investors sought safe-haven assets. It edged back up to around 4.99 percent that day, however, as high oil prices rekindled worries about inflation.


soohan@heraldcorp.com