US alerts Gulf states to prepare for high-intensity military operation

Tight Israeli election deepens Middle East uncertainty

Brent crude at $115.32, WTI at $102.78 per barrel

Diplomatic prospects limit further price gains

A cargo ship is anchored in the Strait of Hormuz near Bandar Abbas, Iran. [AP]
A cargo ship is anchored in the Strait of Hormuz near Bandar Abbas, Iran. [AP]

Oil prices rose Wednesday amid speculation that the United States could launch a high-intensity military operation against Iran after next month's midterm elections. Uncertainty over the Middle East outlook also deepened as Israel's general election produced an extremely tight race between the ruling and opposition camps.

Brent crude futures for December delivery settled up 1.26% at $115.32 a barrel on the London ICE Futures Exchange on Wednesday (local time).

West Texas Intermediate for December delivery closed up 2.88% at $102.78 a barrel on the New York Mercantile Exchange. Oil prices, which had fallen for two consecutive days, reversed course as military tensions in the Middle East flared again.

The prospect of a further US strike on Iran was cited as the primary driver of the price increase.

The Wall Street Journal reported Wednesday (local time) that the US had notified key Arab states in the Gulf region to prepare for a short but high-intensity military operation after the Nov. 3 midterm elections.

The possibility that Washington could take military action against Iran after the midterms has reignited tensions across the Middle East.

Uncertainty surrounding the outcome of Israel's general election also contributed to the price rise.

With vote counting still under way, the Israeli election has produced a tight contest between the right-wing bloc led by Prime Minister Benjamin Netanyahu and the opposition camp led by former military chief of staff Gadi Eisenkot.

The razor-thin margin between the two sides has added to uncertainty over Israel's future policy toward Iran and the broader trajectory of the Middle East.

However, the remaining possibility of a diplomatic resolution kept a lid on further price gains.

Iran has left the door open to a diplomatic settlement, and mediation efforts through Qatar and other intermediary states continue.


sjy@heraldcorp.com