Oil Prices Hover Near $115 as Iran-Saudi tensions and U.S. midterm outlook pressure markets

Brent crude settled close to $115 a barrel on Tuesday as escalating tensions in the Persian Gulf and the approach of the U.S. midterm elections kept oil markets on edge. More than 30 maritime incidents were recorded in the Strait of Hormuz and adjacent waters in October, up from 14 in September, according to the UK Maritime Trade Operations (UKMTO). The latest attack targeted a crude tanker in Iraq’s exclusive economic zone, indicating that vessels beyond those attempting covert transits are also at risk.

Very large crude carriers (VLCCs) accounted for 28% of all drone and missile strikes in the Gulf, with 32 ships affected, representing roughly 4% of the global VLCC fleet. Freight rates for a Saudi Arabia-China voyage remained high at about $33 per barrel, and demurrage charges in the region have risen to $1,000,000 per day since mid-August.

"The increasing difficulty of reporting strikes reflects that many ships now prefer to sail unnoticed," UKMTO said.

In corporate news, U.S. gas producer EQT announced a $13 billion all-stock acquisition of Range Resources, creating the largest U.S. gas company with more than 9 bcf/d of Appalachian output. Ovintiv disclosed a $0.9 billion cash purchase of Canada’s Logan Energy, adding roughly 20,000 boe/d and 266,000 net acres in the Montney shale. BP began the second phase of exploration in Venezuela’s offshore Loran gas field, while ExxonMobil reported a commercial discovery at its Rockhead-1 well offshore Guyana, estimating 500-600 million barrels of resources. ENI started construction of the 3 TCf Cronos gas project offshore Cyprus, targeting first gas in early 2028.

The Trump administration is reportedly negotiating de-escalation talks with Tehran, mediated by Qatar and Pakistan, which have capped the upside for ICE Brent at $115 per barrel. Meanwhile, Yemen’s Houthis claimed a ballistic missile strike on Saudi Arabia’s 550,000 b/d Ras Tanura refinery, causing a fire and temporary disruption.

OPEC+ is expected to keep December output targets steady at its upcoming meeting, with core members focusing on 2027 production quotas after completing a rollback of voluntary cuts that had been disrupted by the Hormuz crisis. The United States is also considering extending a truce with China on port fees for Chinese-linked vessels until early January, preserving a suspension of tit-for-tat charges that had raised freight costs.

Other regional developments include Singapore’s state gas buyer launching its first LNG term-supply tender, Indonesia shifting to government-to-government crude import contracts, and Saudi shipping firm Bahri ordering three new VLCCs from a domestic shipbuilder for delivery in 2029-30.