Brent Back Above $104 as Midterms Clear and Hormuz Risk Stays Priced In

Brent crude futures climbed $0.76, or 0.7%, to $104.36 a barrel by 07:30 GMT on Wednesday 4 November, as traders digested US midterm election results that handed Democrats majorities in both houses of Congress. US West Texas Intermediate gained $0.63, or 0.7%, to $96.72, reversing an earlier decline, Reuters reported.

The bounce follows a rough stretch. Brent had closed the previous session at its lowest in nearly four weeks, after October saw prices approach $120 a barrel — levels last seen in the early stages of the war — as markets priced in another escalation cycle involving Ukraine and Iran.

What do the midterms change for oil?

Not much on their own, according to a GlobalData TS Lombard report authored by Christopher Granville. The report argues that October's rally "largely discounts the expected post-midterm escalation" — in plain terms, the market already paid for the risk, and the risk did not fully arrive.

Granville's base case calls the next significant move downward, toward $80 a barrel. He does not rule out the upside entirely: a surge through $150 remains a tail risk in the analysis.

The takeaway is that analysts see more room to fall than to climb, but the floor under prices is being held up by logistics, not just geopolitics.

Why freight is doing the heavy lifting

Granville noted that the double-handling cost of rerouting cargoes through the Strait of Hormuz has pushed very large crude carrier (VLCC) freight rates to more than five times pre-war levels. That premium lands directly on Asian refineries, keeping their delivered crude costs elevated even when benchmark prices soften.

The takeaway: as long as Hormuz routings stay distorted, Asian refining margins bear a freight tax the benchmarks only partly reflect.

How hot is the Middle East right now?

Tensions stayed in focus after US officials reported conducting what they called "defensive" strikes on Iran's Qeshm Island, targeting surface-to-air missiles. One official, cited by the news agency, described the operations as limited and said there was no indication of an escalation into larger combat activities.

Diplomatic channels remain open but slow. Qatar has intensified mediation efforts to prevent further escalation following the election results, yet a senior Iranian official told Reuters that Iran and the US were still far from reaching an agreement to end the hostilities.

The takeaway: limited strikes plus stalled talks is a mix that keeps a geopolitical premium in the price without justifying a spike.

What did the inventory data show?

Industry figures for the week ended 30 October, sourced to the American Petroleum Institute via market sources, pointed to a tightening crude balance:

• US crude inventories fell by 5.27 million barrels
• Gasoline stocks rose by 1.43 million barrels
• Distillate stocks declined by 1.19 million barrels

The crude draw offers fundamental support to Wednesday's advance, though official Energy Information Administration figures will provide the confirmation traders typically wait for.

Are Gulf exports actually falling?

Reported Gulf oil exports came in lower in October than in September, which had marked the highest export level since the start of the Iran war, according to two ship-tracking firms. Both companies cautioned the figures could rise as more shipment data becomes available.

There is a measurement problem underneath the numbers. Tankers have increasingly sought to avoid detection amid attacks on shipping near the Strait of Hormuz, complicating efforts to monitor oil flows and raising the likelihood of further revisions to export data. Kpler's own figures showed a decline of roughly one million barrels per day in crude and condensate shipments from September — but an upward adjustment was considered likely there too.

The takeaway: the apparent export drop may say more about darkened tankers than about actual barrels leaving the Gulf.

The watch item

Watch the Qatar-mediated talks and the next round of Hormuz incident reports: a signed de-escalation would test Granville's $80 target, while any confirmed hit on commercial shipping revives the $150 tail risk.