Oil Prices Steady After Trump Appears to Rule Out Iran Strikes Before Midterms — 2nd Update

By Farhan Rafid and Anthony Harrup

Oil prices recovered from early losses and settled slightly higher Friday as traders weighed President Trump's pledge not to attack Iran before the U.S. midterm elections against persistent shipping risks in the Persian Gulf and extensive offshore production shut-ins in the Gulf of Mexico.

December Brent crude futures edged up 0.4%, to $104.72 a barrel, for a 2.4% weekly gain. West Texas Intermediate crude for November delivery rose 0.4%, to $91.85 a barrel, up 0.8% on the week.

Trump said Thursday that the U.S. wouldn't attack Iran before the November midterm elections, citing what he called "productive discussions" with Tehran. The U.S. naval blockade of Iran remains in place, with roughly a dozen Navy ships in the region, The Wall Street Journal reported.

Oil prices are likely to remain elevated in the short term as risks to Middle East shipping routes persist and U.S. offshore production remains disrupted, said Hani Abuagla, a senior market analyst at XTB MENA.

Analysts at MUFG said geopolitical risks remain high amid fighting between Saudi Arabia and the Houthis, while shipping through the Persian Gulf and Strait of Hormuz continues to face threats.

Brent's spread between the first two futures months remains in backwardation at around $3 a barrel, indicating continued tightness in the near-term market, they said. Backwardation is when near-term oil futures trade at a premium to contracts for later delivery, typically indicating tighter supplies in the immediate market.

Goldman Sachs estimated that Brent's geopolitical risk premium reached $22 a barrel in September, the second-highest monthly level on record and above the peak of $16 during the Russia-Ukraine war in 2022. The bank also estimated that a 100 million-barrel decline in commercial inventories across OECD countries raised Brent's fair value by nearly $8 a barrel.

Tensions elsewhere in the region also remain high. Iran and its Houthi allies in Yemen carried out another series of attacks Wednesday night and Thursday, including strikes targeting shipping in the Persian Gulf and Saudi Arabia, the Journal reported.

The U.S. also increased economic pressure on Tehran on Thursday. The Treasury Department sanctioned 17 vessels it said were part of Iran's remaining shadow fleet and had transported millions of barrels of Iranian crude, petroleum and petrochemical products to markets in South and East Asia.

Meanwhile, Hurricane Isaias increased disruptions to U.S. Gulf production. The storm reached Category 3 with winds of 120 mph as it approached the U.S. coast, and was expected to make landfall in Alabama "at or near major hurricane strength" Friday evening, according to the National Hurricane Center.

The Marine Minerals Administration said nearly 1.5 million barrels a day of oil and 1.3 billion cubic feet a day of natural gas had been shut in as of midday Friday, equivalent to 71.5% of current Gulf oil output and 58.8% of natural gas output.

The threat to U.S. Gulf Coast refineries has narrowed despite the offshore shutdowns. Less than 500,000 barrels a day of refining capacity in Alabama and Mississippi were at risk of a direct hit, down from 2.5 million barrels a day expected earlier in the week, S&P Global Energy said. Port closures and shipping delays could still disrupt refined-product exports, with U.S. Gulf Coast diesel exports averaging 1.4 million barrels a day so far this week, down from 2.1 million barrels a day the previous week, S&P said.

U.S. refineries appeared to have dodged a threat from the storm, Robert Yawger, a commodity specialist at Mizuho Securities USA, said in a note.

With production at record levels near 14 million barrels a day, "the U.S. can afford to take a few barrels of offshore production offline," he said. "But it can't afford to lose refining capacity with winter heating oil season on the horizon and distillate storage testing many-year lows."

Write to Farhan Rafid at farhan.rafid@wsj.com and Anthony Harrup at anthony.harrup@wsj.com

(END) Dow Jones Newswires

October 09, 2026 15:35 ET (19:35 GMT)