Brent Crude Drops 12.5% as Former Biden Adviser Sees 50%+ Chance of Iran Conflict

Brent crude was hovering near $98 per barrel on Friday after sliding more than 12.5% during the week on hopes of reduced tensions. Amos Hochstein, a former energy adviser to President Joe Biden, sees the likelihood of a renewed US-Iran war as exceeding 50%.

Market participants interpreted the Democratic victory in the midterm elections as a factor that would limit the conflict, driving oil down 8% on Wednesday. That shift in pricing means fuel buyers remain vulnerable to higher diesel, gasoline and jet fuel expenses should hostilities restart.

Did the election alter the Iran war strategy?

Hochstein, now a managing partner at TWG Global, told CNBC that fresh strikes on Iran could stay the leading approach. He believes the choice to restart combat came before the midterms and was postponed by a few days.

“I think that there is a very good chance that we go back to conflict.”

Amos Hochstein, TWG Global managing partner, CNBC

US forces reportedly targeted Iran's Qeshm Island the day ahead of the vote.

Hochstein sees three paths for President Donald Trump: renewed warfare, a deal Trump is unhappy with, or prolonged economic sanctions on Iran.

What is $98 Brent crude actually reflecting?

Attacks on vessels have not stopped, however. Iran stated that strikes hit three additional tankers in the Strait of Hormuz on Thursday.

Figures from the UK Maritime Trade Operations agency (UKMTO) indicate that assaults on oil-carrying ships are close to a record pace.

Separately, Iran reportedly sent a nuclear plan to Washington through Qatar. The US continues to demand that Tehran give up its nuclear capabilities.

Iran, by contrast, wants the US naval blockade lifted, sanctions eased and frozen funds freed before it fully reopens the Strait of Hormuz.

Goldman Sachs set a December Brent target of $105 before the vote, citing the risk of supply disruptions. Brent now trades below that level.

“Until there is a credible path to safer, cheaper transit through the Gulf, oil is likely to remain supported on dips and prone to sharp moves on any escalation headlines.”

KCM chief analyst Tim Waterer

Brent at $98 is below its four-year high of more than $120. Even so, the level indicates that traders are splitting the risk between a diplomatic resolution and renewed strikes.

Oil now operates on two timelines: the White House's decisions and tanker attacks, which the midterms did not alter.