ING analysts Warren Patterson and Ewa Manthey say Brent remains elevated near $114 as investors await clarity on President Trump’s Iran policy after the US midterm elections. They argue the market has priced a higher chance of re‑escalation, but note that an absence of renewed strikes on Iran after the vote could be enough for Brent’s risk premium to erode.

Brent holds elevated on Iran risks

“Oil prices edged lower yesterday, settling down for a second consecutive day. With Brent still trading around $114/bbl, oil prices remain elevated as the market waits for greater clarity on President Trump’s next move toward Iran. The broader move higher in recent weeks suggests the market is pricing in a greater likelihood of re-escalation.”

“We’ll likely have to wait until after the 3 November US midterms more clarity on how the situation in the Middle East evolves. An agreement between the US and Iran may not be needed for prices to pull back. If we get past the elections without renewed strikes on Iran, that might be enough for the market’s risk premium to start eroding.”

“The middle distillate market is weakening, with the ICE gasoil crack trading down toward $70/bbl, its lowest level since early October. Diesel markets have eased after Russia lifted its diesel export ban earlier in the month, following a deal with Trump to supply more diesel to global markets. Russia is a major diesel exporter. These flows have come under pressure this year due to Ukrainian attacks on Russian refineries, which ultimately led Russia to impose a diesel export ban.”

“The latest API data shows US crude oil inventories fell by about 2m barrels last week. Meanwhile, gasoline and distillate fuel oil inventories rose by 2.3m barrels and 420k barrels, respectively. The more widely followed EIA weekly report will be released later today.”