Brent crude is trading near $98 per barrel after a weekly decline of more than 12.5% amid expectations of de-escalation of tensions. Former energy adviser in the Biden administration Amos Hochstein estimates the probability of renewed war between the US and Iran at above 50%.
Traders perceived the Democrats' victory in the midterm elections as a restraining factor for war, and oil fell 8% on Wednesday. This reassessment of risks makes fuel buyers vulnerable to new spikes in prices for diesel, gasoline and jet fuel if hostilities continue.
Did the elections affect plans for war with Iran
Hochstein, who now serves as managing partner of TWG Global, said the option of new strikes on Iran remains the main one. According to him, the decision to resume hostilities was made before the elections, but implementation was postponed for several days.
"There is a very high probability of a return to conflict," Amos Hochstein noted.
US forces struck Qeshm Island in Iran a day before the vote. Hochstein identifies three scenarios for President Donald Trump: a new war, an agreement Trump dislikes, or prolonged economic pressure on Iran.
What the Brent price reflects
Attacks on vessels are not stopping. On Thursday, three more tankers were hit in the Strait of Hormuz. According to the UK Maritime Trade Operations (UKMTO), the number of attacks on oil tankers is close to record levels.
In parallel, Iran sent a nuclear proposal to Washington through Qatar. The US continues to demand that Tehran abandon nuclear development. In response, Iran insists on lifting the naval blockade, easing sanctions and unblocking frozen assets before the full opening of Hormuz.
Goldman Sachs set a Brent target price of $105 for December before the vote, citing the risk of supply disruptions. Brent is now trading below that level.
"Until there is a real path to safer and cheaper transportation through the Persian Gulf, oil is likely to find support on dips and react sharply to any news of escalation," said KCM chief analyst Tim Waterer.
Brent at $98 is trading below the four-year high that exceeded $120. Nevertheless, this price indicates that traders are pricing in the risks of a new deal and possible strikes. As a result, oil reacts to two main factors — decisions by the White House and attacks on tankers, which the midterm elections did not affect in any way.
Cryptalist analysis: The oil market is demonstrating a classic reaction to geopolitical uncertainty: a short-term decline on de-escalation expectations is replaced by heightened volatility at the first signs of escalation. For the cryptocurrency sector, such dynamics create dual pressure — rising oil prices strengthen inflation expectations and support demand for "digital gold," while sharp spikes in risk-off sentiment can trigger short-term sell-offs in digital asset markets. Institutional investors will closely monitor the situation in the Strait of Hormuz as a key indicator of global risk appetite.