Oil markets are on edge ahead of the weekend, as midterm elections near and fresh U.S. strikes on Iran are predicted

By Isabel Wang and Myra P. Saefong

Global oil prices are closing in on their highest levels since the Iran war began

Oil has climbed back to an Iran-war high and may soon go higher, if the U.S. and Israel strike Iran after their respective voters go to the polls in the coming days.

Eight months into the Iran war, the global energy crisis is showing no signs of easing. Instead, oil prices were surging again, hurtling toward their highest levels since the conflict began in February and stoking fears that the world is heading toward an even more punishing energy crunch.

"Worries about oil back over $100 a barrel and the Iran conflict flaring up again are top of mind heading into the weekend," said Ryan Detrick, chief market strategist at Carson Group.

Global Brent crude for December delivery (BRN00) (BRNZ26) jumped 3.4% to $111.44 a barrel Friday afternoon, putting the benchmark within striking distance of its wartime settlement high of $118.35, reached in late March. West Texas Intermediate crude for December delivery (CL.1) (CLZ26) also climbed 3.5% to $103.09 a barrel. It settled as high as $112.95 in April, its highest level since the Iran war began, according to FactSet data.

The recent uptick in oil prices comes as the Iran-backed Houthis conducted further drone strikes Wednesday on Saudi airports and the Saudi Aramco Shaybah oil field, attacks that earlier this week led the U.S. to order embassy staff in Riyadh to leave the country. Trump has warned that the U.S. could attack Iran anew after the Nov. 3 midterm elections, and both the U.S. and Israel have been preparing options for strikes after voters go to the polls. Israel holds its elections on Tuesday.

Another risk for energy markets: Iran said that if U.S. and Israeli bombings resume, Tehran will respond with strikes on pipelines and airports in oil-rich Persian Gulf countries, according to Wall Street Journal reporting.

"Iran is agitating to keep oil prices high and push down American popular support for the Trump administration and the war," said Matt Gertken, chief geopolitical and U.S. political strategist at BCA Research. "But after the election President Trump will intensify strikes to try to coerce Iran's leaders into a ceasefire."

Trump on Thursday hinted at fresh action against Iran during a speech in Iowa.

"We're going to have Iran finished very soon," he said in Sioux City. "One way or the other, it's going to be done very soon, and your gasoline prices and your oil is going to come tumbling down."

Anna Kelly, a White House spokeswoman, said in an emailed response to MarketWatch on Friday that the U.S. will not be attacking Iran "at any time" prior to the midterm elections.

"As President Trump stated, Iran is in very bad condition, both economically and militarily, and the blockade will remain in full force and effect, with oil flowing in record numbers of barrels through the Hormuz Strait," she said.

But oil's climb back toward its wartime highs is more than a geopolitical story. It's the clearest sign yet of how exposed Trump and the Republicans are to the one issue they can't spin: the price at the pump. The national average price for a gallon of regular gasoline is $4.29, according to AAA. That's up from less than $3 a gallon before the war.

It's a test not just for a stock market already juggling earnings, an upcoming interest-rate decision from the Federal Reserve and mounting worries about debt related to the artificial-intelligence build-out, but also for Trump and his party, who have staked so much on the economy ahead of a crucial moment that could shape the direction of the president's final two years in office.

Beyond a possible fresh U.S. attack on Iran, the post-midterm outlook is cloudy. Democrats appear poised to take control of at least one chamber of Congress and have pledged to try to wind down the Iran war. But they're unlikely to win enough seats to override a Trump veto of a bill that would restrict military operations, as a longtime national security expert wrote in a CNN analysis.

Trump, for his part, has taken steps to ease the pressure on energy markets, including temporarily allowing Russia to supply diesel to U.S. and other markets and announcing plans to use Defense Production Act funding to expand oil production and refining.

That move opens up money for oil projects, but it takes years to build a refinery. So really, "this is a policy for the 2030 diesel market," Giacomo Prandelli, a commodity analyst and geopolitical strategist and the writer of a newsletter called Merchant's News, said on X. Voters will soon go to the polls, and they "pay today's prices."

"The oil market isn't pricing availability alone. It's pricing reliability," said Angie Gildea, global head of oil and gas at KPMG, in comments to MarketWatch. "Even when barrels are flowing, concerns about energy infrastructure and shipping routes can keep a risk premium in prices."

With no end to the Iran conflict in sight, market analysts see oil prices staying elevated even in the aftermath of the midterms.

Brent crude could remain in the range of $110 to $120 a barrel for a while, further increasing inflation risks, said Fawad Razaqzada, global macroeconomic market analyst at StoneX Trading and Forex.com. "That in turn could be bad news for all sorts of risk assets," he told MarketWatch on Friday.

Gertken at BCA Research said consumers can handle oil prices that average $105 a barrel over the coming months, but not an increase to $160. However, should oil reach $160 a barrel, the Trump administration might try "toppling the Iranian regime," he said. "So Iran will probably not drive prices that high."

He expects to see U.S. strikes intensifying in the coming months, and then both the U.S. and Iran opting for negotiations due to a "lack of economic and political capabilities to support a longer war."

Both the U.S. and global oil benchmarks have risen for three consecutive weeks and on Friday were on pace for their biggest three-week advance since early September, according to FactSet data.

Robert Schroeder and Joy Wiltermuth contributed.

-Isabel Wang -Myra P. Saefong

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10-23-26 1430ET