Oil Markets Brace for a New Iran Escalation After U.S. Midterms

Brent holds near $115 as Iran war tensions and escalating Saudi-Houthi hostilities keep oil markets on edge ahead of U.S. midterms.Hormuz Becomes Even More Dangerous — and More Expensive- October has seen the most acute escalation in maritime attacks since the US-Iran war started eight months ago, with already more than 30 incidents recorded in the Strait of Hormuz and surrounding waterways, up from 14 in September. - The most recent addition to the list of maritime targets is a crude tanker in Iraq’s exclusive economic zone, signaling that it is not only tankers seeking to surreptitiously transit the Hormuz that get targeted by Iran. - VLCCs, the largest crude tankers available, account for 28% of all drone and missile attacks in the Persian Gulf, with the 32 impacted ships representing almost 4% of the global VLCC fleet.- Freight rates from the Gulf remain elevated with a Saudi Arabia-China voyage still costing around $33 per barrel, whilst regional demurrage rates have been rising since mid-August to their current level of $1,000,000/day.- UKMTO, a provider of maritime security alerts, recently admitted that it is becoming increasingly more difficult to report on strikes as transiting ships prefer to sail unnoticed and charterers are wary of pushing freight rates even higher. Market Movers- US gas producer EQT (NYSE:EQT) has agreed to buy Range Resources (NYSE:RRC) in a $13 billion all-stock deal to create the largest US gas company, with the combined Appalachian-focused company having a net output of more than 9 bcf/d.- US energy firm Ovintiv (NYSE:OVV) will acquire Canada’s Logan Energy in an all-cash deal valued at $0.9 billion, adding around 20,000 boe/d of production and 266,000 net acres across the Montney shale play.- UK oil major BP (NYSE:BP) has started the second phase of exploration in Venezuela’s offshore Loran gas field, using the research and survey vessel Fugro Brasilis to perform final seabed studies. - US oil giant ExxonMobil (NYSE:XOM) reported a commercial discovery with its Rockhead-1 exploration well offshore Guyana, its first drilling success since the 2024 Hatchetfish find with a resource estimate of 500-600 million barrels. - Italian oil major ENI (BIT:ENI) has launched the construction of its 3 TCf Cronos project offshore Cyprus, aiming for first gas in the first half of 2028, to be exported via Egypt’s Damietta LNG terminal. Tuesday, October 27, 2026The oil markets are counting down the days until the November 3 midterm elections in the US, with expectations of impending hostilities rising into next month. Last-minute efforts to negotiate some form of de-escalation are ongoing, with both Qatar and Pakistan seeking to mediate between the Trump administration and Tehran, temporarily capping the upside for ICE Brent at $115 per barrel. Simultaneously to Hormuz tensions, the Saudi-Houthi conflict appears to be gaining self-sustaining momentum. OPEC+ Holds the Fort on Supply Hikes. OPEC+ is expected to hold December output targets steady at its Sunday's meeting, with seven core members focusing on 2027 production quotas instead after they’ve completed the roll-back of 1.65 million b/d voluntary cuts, disrupted by the Hormuz crisis.US Moves China Shipping Fees into 2027. The US is considering extending its truce with China on port charges for Chinese-linked ships by two months to January 9, preserving a suspension of tit-for-tat fees that previously imposed millions of dollars per port call and raised freight costs.Houthis Hit Saudi Arabia’s Largest Refinery. Yemen's Houthis claimed a ballistic missile strike hit Saudi Arabia's 550,000 b/d Ras Tanura refinery, causing a fire and disrupting operations at the Middle Eastern kingdom’s largest plant, with an earlier March attack shutting it for three months.Refining Boom Derails Galp–Moeve Merger. Portugal’s Galp and Spain’s Moeve have abandoned plans for a potential downstream merger that would’ve combined 700,000 b/d of refining capacity and 3,500 service stations, claiming that 2026 bumper profits made it harder to agree M&A terms.Brussels Builds a European Wall Against China. The European Union may introduce quotas or tariffs on Chinese chemicals, furniture and machinery from early 2027, seeking to replicate its recent import caps on hybrid vehicles as it struggles to narrow its €360 billion trade deficit.Singapore Launches First LNG Term Tender. Singapore’s state gas buyer GasCo launched its first ever LNG term supply tender after neighbouring Indonesia had announced it would slash pipeline gas exports by 15% to 31 MMCf/d, just as the government plans to add 5 new gas-powered plants.East Timor Buys Out Its Untapped Offshore Gem. Australia’s major Woodside (ASX:WDS) has agreed to sell its stakes in the Greater Sunrise fields offshore East Timor for $200 million to the island nation, leaving state oil firm Timor gap as the only stakeholder of the untapped 5.3 TCf field.Alberta Pushes for Scrapping of Tanker Ban. The province of Alberta called on the Carney government to repeal Canada's 2019 West Coast tanker ban that bars vessels carrying over 12,500 tonnes from loading at British Columbia ports, backing a proposed 250,000 b/d crude-by-rail route.Indonesia Gives Up on Market-Based Imports. Indonesia plans to replace tender-based crude oil and refined product imports with government-to-government (G2G) and government-to-business (G2B) agreements to secure supplies, courting India and China for long-term supply deals.Dangote Considers Third African Refinery. Nigeria’s Dangote conglomerate is considering building a third 700,000 b/d refinery in Africa, alongside the existing plant in Lekki and the upcoming Kenyan refinery in Lamu, whilst simultaneously investing into refined product pipelines in West Africa.Malaysia Doubles Down on Coal. The Malaysia government has proposed extending the lifespan of its existing coal-fuelled power plants despite an earlier pledge to retire coal by 2044, with coal accounting for 56% of current generation as JKM prices jumped to $33 per MMBtu this week.Iron Ore Plunges Again on China Demand Fears. Iron ore prices fell to their lowest since September 2024 as weak Chinese demand and wafer-thin margins are expected to curb Q4 steel consumption, sending the Dalian iron ore futures to ¥662 per tonne, below the $100 per tonne threshold. White House to Ease Methane Emission Rules. The Trump administration is planning to relax rules on methane emissions from oil and gas operations, including exemptions for wells producing up to 15 boe/d, projecting incremental output of 210 million barrels for older and depleted wells.Bahri Orders Three New VLCCs to Expand Tanker Fleet. Saudi national shipping company Bahri has ordered three VLCCs from domestic shipbuilder International Maritime Industries for $451 million, with deliveries scheduled in 2029-30 and marking the first attempt at exclusively Saudi shipbuilding.UK Considers Fast-Track Approvals for Tiebacks. The UK’s Burnham government is considering the fast-tracking of a small number of oil and gas tiebacks before pending legislation creates Transitional Energy Certificates that extend existing fields but preserve the country’s exploration ban.By Tom Kool for Oilprice.comMore Top Reads From Oilprice.comU.S. Partner in Venezuela Oil Deal Looks to Hike Crude ProductionU.S. Diesel at $6.30 a Gallon as First Russian Cargo Sets Sail for New YorkOil India Strikes Natural Gas in Shallow Offshore Basin