President Donald Trump anticipates that the conflict in Iran will conclude shortly after the November midterm elections, predicting a subsequent sharp decline in oil prices. This projection comes amidst fluctuating oil prices, with Brent crude closing above $104 and WTI above $100. Regional tensions remain high, evidenced by attacks on Saudi oil infrastructure and Houthi advances threatening key shipping routes.
- Trump expressed an expectation that the conflict in Iran will conclude shortly after the November midterm elections, anticipating a subsequent sharp decline in oil prices.
- Oil prices experienced a pullback on Friday, yet concluded the week with significant gains, as Brent crude settled above $104 per barrel and WTI surpassed $100.
- Regional tensions persist at a high level, with ongoing attacks on Saudi oil infrastructure and Houthi advances posing threats to critical shipping routes.
President Donald Trump indicated on Saturday that the conflict in Iran is likely to conclude soon after the November midterm elections, predicting a significant drop in energy prices thereafter. "I think very soon, I think it'll be right after the midterms, actually," Trump stated during a visit to Ireland when questioned by reporters about the potential end of the Iran war. "I would say shortly, and oil will come tumbling down when that happens."
Oil prices saw a retreat on Friday, but still posted substantial weekly gains, having surged past $100 a barrel for the first time in several months. Brent crude futures, the global benchmark, closed down 2.8% at $104.61 per barrel, while U.S. West Texas Intermediate settled 2.4% lower at $100.05 per barrel. Earlier on Thursday, Brent crude had reached a peak of approximately $108 a barrel, with WTI hitting over $104.
This price dip occurred as Iranian state media reported Tehran's intent to convene with Gulf states in Oman to discuss the Strait of Hormuz, signaling potential diplomatic engagement amidst a week of heightened tensions. MS NOW cited a senior government official and a Gulf diplomat who indicated that Iranian and Gulf officials are scheduled to meet in Muscat, Oman's capital, on Monday to finalize an agreement establishing an Iran-Oman shipping route through the Strait of Hormuz. However, Iranian President Masoud Pezeshkian asserted that his country "will not surrender," emphasizing its resilience against aggression from the U.S. and Israel.
Speaking late Friday in New Delhi to a gathering of Indian religious leaders, Pezeshkian remarked, "Iran has successfully stood against Israel and the U.S. Since we are seeking truth and justice, we will not yield in front of bullying arrogance." These remarks preceded the BRICS Summit in India over the weekend and followed Trump's earlier assertion that Iran would have "wiped out" Israel and the Middle East, and launched attacks on U.S. cities, had Washington not intervened militarily.
Saudi pipeline attack
Trump also suggested on Saturday that Iran was likely responsible for recent attacks on Saudi Arabia's vital East-West crude oil pipeline. "Well, I think they are. Probably, they are," he responded when asked by a reporter about the incident. Saudi Arabia announced on Friday that it had temporarily halted operations on the pipeline as a precautionary measure following multiple drone attacks originating from Iraq. The Saudi government confirmed that the drones struck the pipeline in the Riyadh and Medina regions on Thursday morning, causing fires and some damage, and resulting in several injuries.
The East-West pipeline is crucial for Saudi Arabia to reroute crude oil exports away from the Persian Gulf, especially as the U.S. and Iran contend for control over the Strait of Hormuz. This pipeline, with a daily capacity of 7 million barrels, traverses the kingdom to reach export terminals on the Red Sea. Emergency response teams were dispatched to secure the pipeline and assess its integrity following Thursday's attacks, according to the Saudi Ministry of Energy. Trump confirmed he had spoken with Saudi Crown Prince Mohammed bin Salman subsequent to the attack.
Houthis "don't want to fight with us"
The U.S. president also disclosed that Yemen's Houthi rebels, who are backed by Iran, have been in communication with his administration. "The Houthis called us and they don't want to fight with us," Trump stated. "They let us know, they don't want to fight with us. They don't want me to go after them." Reports indicate that the Houthis advanced to Yemen's strategic Perim Island on Friday, significantly bolstering the militant group's efforts to seize control of one of the world's most vital shipping choke points. The capture of Perim Island, as reported by various news agencies citing Yemeni government sources, occurred just a day after the Houthis took control of Yemen's port city of Mokha on the Red Sea coast. CNBC has been unable to independently verify these reports.
This rapid territorial advance is viewed as a major setback for Saudi Arabia and the Yemeni forces it supports, positioning Iran and its allies to potentially control two critical oil choke points on opposite sides of the Arabian Peninsula: the Bab el-Mandeb Strait and the Strait of Hormuz. Perim Island, a small, rocky landmass, is instrumental in dividing the Bab el-Mandeb Strait, a waterway connecting the Red Sea to the Gulf of Aden and subsequently to global markets. Concerns are mounting that the Houthi movement towards the Bab el-Mandeb Strait could have substantial consequences for international trade, particularly if the group intensifies threats or attacks against Red Sea shipping. Following the Houthi advance, Saudi Crown Prince personally urged Trump for U.S. military intervention, according to MS NOW, citing a source familiar with the discussions.
