Oil Heads for a Sharp Weekly Drop as Traders Weigh Iran Conflict Risks After the Midterms

Crude prices slipped on Friday and are on track for a steep weekly decline, even though investors fear the US and Iran could return to open fighting now that the election is over. Hopes for a diplomatic opening are pulling in the opposite direction.

Where Oil Prices Stand Now

Brent crude fell 1 % to $100 a barrel, and US West Texas Intermediate dropped 0.5% to $90.06. Brent has retreated from a weekly high above $110 on Monday, and WTI has come down from levels over $100 in the same period.

Analysts See Escalation Risk

Bob McNally of Rapidan Energy Group told CNBC he sees an 80% chance that military fighting resumes, and expects both benchmarks to move above $100. He argues that President Trump wants to stop Iran from obtaining a nuclear weapon at nearly any cost, while Tehran refuses to give up its capabilities, so the escalation dynamic stays in place. Economists at Lombard Odier share that view.

Diplomacy and Shipping Attacks

Reuters reported that Iran sent a nuclear proposal to Washington through Qatar, according to a senior Iranian official, which has raised hopes of a breakthrough. At the same time, Iran said three more tankers were attacked in the Strait of Hormuz on Thursday, and UKMTO data shows attacks on vessels continuing at a near record pace.