Oil rebounds above $115 amid Iran strike concerns

Oil prices climbed on Wednesday, with Brent crude rising above $115 a barrel as uncertainty surrounding Israel’s parliamentary election and indications of possible renewed American military operations against Iran heightened concerns over Middle Eastern energy supplies.

West Texas Intermediate traded near $101 a barrel, reversing part of its losses from the previous two sessions, as investors assessed the implications of Israel’s inconclusive election and preparations for a possible escalation after the November 3 United States midterm elections.

The Trump administration has informed several Persian Gulf countries through diplomatic and military channels that they should prepare for a potentially short but intensive military campaign against Iran following the American elections. However, President Donald Trump has not made a final decision on further strikes.

The White House declined to discuss possible military preparations, maintaining that Trump continues to retain all options to prevent Iran from acquiring nuclear weapons. The uncertainty has added another dimension to oil market volatility, with traders weighing the prospect of fresh attacks against continuing diplomatic efforts.

Israel’s election has complicated the regional outlook. Exit polls showed opposition leader Gadi Eisenkot’s bloc running virtually level with Prime Minister Benjamin Netanyahu’s coalition, leaving both camps short of the 61 seats required for a majority in the 120-member Knesset.

Updated projections from Israel’s major television networks indicated that Eisenkot’s opposition grouping could secure a narrow advantage, although the margins remained too small to establish a clear winner. Official counting continued on Wednesday, with negotiations over forming a government expected to prove difficult.

Netanyahu and Eisenkot both claimed mandates to form the next government. The political stalemate could leave Netanyahu serving as caretaker prime minister while parties negotiate coalition arrangements, potentially prolonging uncertainty over Israel’s military and diplomatic policies towards Iran.

Israel’s Central Elections Committee recorded turnout of 77.7%, the highest in more than two decades. The substantial participation reflected the importance voters attached to the country’s political direction amid continuing regional hostilities and domestic disagreements over Netanyahu’s leadership.

Washington’s military preparations have attracted particular attention in energy markets because further confrontation could threaten oil installations, maritime transport and export infrastructure across the Gulf.

American forces have been replenishing munitions, strengthening missile defences and repositioning personnel away from vulnerable installations. Additional naval and aviation assets are also being prepared, although the extent and timing of any deployment remain subject to military decisions.

A Patriot missile defence system is being moved from Texas towards the region, while preparations involving bomber aircraft and fighter jets have reinforced expectations that Washington wants operational flexibility should Trump authorise further action.

Potential targets under consideration include Iranian nuclear installations, missile capabilities and energy infrastructure. Such operations could provoke retaliation against American interests and facilities belonging to regional countries, creating additional risks for crude production and transportation.

Iran has warned that renewed attacks would bring a wider response. Tehran has also maintained its negotiating conditions despite diplomatic initiatives involving regional governments seeking to prevent another major escalation.

Officials from Saudi Arabia, Pakistan and Turkey travelled to Tehran on Monday for discussions intended to advance diplomatic contacts. However, disagreements over nuclear restrictions, security guarantees and the conditions for ending hostilities have continued to obstruct a settlement.

Iran’s Supreme Leader Mojtaba Khamenei has reiterated Tehran’s position on the terms necessary to end the confrontation, leaving negotiators facing substantial differences over the conditions for any agreement.

The uncertainty comes after months of disruption to regional energy flows. Brent has gained more than 85% this year as the conflict involving the United States, Israel and Iran has affected shipments and raised the cost of securing oil supplies.

Market participants are particularly sensitive to developments affecting the Strait of Hormuz, a crucial passage for Gulf petroleum exports. Restrictions on shipping and the possibility of further attacks have kept a substantial geopolitical risk premium embedded in crude prices.

Supply indicators have also supported prices. The American Petroleum Institute estimated that United States crude inventories declined by approximately two million barrels during the week ending October 23, suggesting tighter domestic stockpiles.

Official weekly inventory figures from the US Energy Information Administration are scheduled for release on Wednesday. The figures will provide further evidence of domestic supply conditions, refinery demand and petroleum product movements.

Traders are also monitoring whether diplomatic contacts produce measurable progress before the American midterm elections, while Israel’s electoral authorities continue counting ballots and political parties assess possible coalition combinations.

The latest Israeli projections placed Netanyahu’s Likud as the largest individual party, despite the broader parliamentary deadlock. Arab parties were projected to secure a substantial representation, potentially influencing the coalition negotiations that follow the final count.