Brent Holds Above $113 as Markets Brace for Post-Midterm Iran Decision

ICE Brent settled almost 2.4% higher on Friday, closing above $113/bbl, as the market prices in the risk of fresh US and Israeli strikes on Iran after the American midterm elections. The Dec-26 contract expired the same day at $117.64/bbl on its final trading session.

The gains cap weeks of price action that, in analysts' view, reflect a market bracing for renewed hostilities between Washington and Tehran. Vessel attacks have multiplied in recent weeks, even as more traffic moves through the Strait of Hormuz. Reports that President Trump wants to give diplomacy a chance weighed on prices in early trading Monday. Iranian negotiators met Qatari mediators in Doha over the weekend. Whether that produces anything remains an open question, and nobody in the market is treating it as a deal in the making.

What happens if the midterms pass without a strike or a deal?

That is the key question for crude desks this week. Analysts frame it bluntly: does the market keep pricing a substantial geopolitical risk premium, or does that premium gradually unwind? Because most developments in this conflict have unfolded over weekends, the market may have to hold its breath until the end of the week. Takeaway: the risk premium is event-driven, not fundamental, and it can deflate fast.

Russian refining back under attack

The roughly two-week pause in Ukrainian attacks on Russian refininers has ended, with strikes resuming late last week. That lull had pushed the ICE gasoil crack (refinery margin for diesel) below $70/bbl, its lowest since early October. Further attacks would likely put a floor under the crack by casting doubt on Russian diesel exports.

Russia's deputy prime minister said the country plans to export 2.15 million tonnes of diesel in November, up from just over 500,000 tonnes in October. That is a fourfold month-on-month jump in the official plan. The number assumes the refineries can run through the renewed strikes, which is precisely what the attacks put in doubt. Takeaway: the diesel supply outlook hinges on whether the strike tempo holds.

OPEC+ holds the line for December

OPEC+ met over the weekend to set December output policy and produced no surprises. Members kept targets unchanged for the month. Most participants are already producing well below their quotas given Persian Gulf disruptions, so the decision changes little in physical barrels.

Positioning data adds nuance. Speculators raised their net long in ICE Brent (bets on higher prices) by 3,576 lots over the last reporting week to 245,457 lots as of last Tuesday, driven by fresh longs. That is still far from the year-to-date high of roughly 430,000 lots set in March, which suggests room to add — but analysts caution that a strong catalyst would be needed, since risk-reward on the long side looks unattractive at current prices. Takeaway: the money is positioned for more upside, but only halfway.

European gas tightens as heating season starts

Dutch TTF gas prices settled more than 6% higher Friday, near EUR104/MWh, before easing slightly Monday. Forecasts show colder-than-usual weather in northwest Europe this week, pointing to potentially large storage draws. EU gas storage peaked just under 75% last Tuesday and has edged lower since, confirming the heating season is underway. With a tight winter balance, analysts expect extreme volatility, with weather mattering more than usual. Takeaway: every cold forecast is now a trading event.

Gold hits a one-year low

Gold dropped 3.65% to $3,874.62/oz, its lowest level in a year, as surging oil stoked inflation concerns and expectations that interest rates stay higher for longer. The tech-share sell-off added pressure as investors liquidated gold to cover losses elsewhere. Silver fell harder, sliding more than 6% and extending its October decline to roughly 18%. The widening gold-silver ratio points to further gold outperformance.

Copper also slipped in the risk-off mood, though physical tightness persists. The LME cash-to-three-month backwardation (premium for immediate delivery) narrowed almost $48/t Friday to $174.85/t but remains elevated, and the Yangshan premium rose above $200/t, indicating constrained refined availability. That tightness should support prices, though analysts see resistance from price-sensitive demand at elevated levels.

Corn slides on harvest pressure

CBOT corn fell nearly 11% last month, its largest monthly decline since June 2023, on harvest supply, weak exports and easing Black Sea concerns. US farmers had harvested 60% of the corn crop by 25 October, up from 44% a week earlier. Weekly export sales dropped 15% week-on-week to 1,303.9 kt as of 22 October.

Speculators cut net long corn positions by 90,314 lots, a sixth straight weekly reduction, to 55,314 lots. Money managers also raised net bearish CBOT wheat bets by 23,725 lots to 74,859 lots on Australian and Argentine harvest progress and expectations of the second-largest global wheat crop. Soybean net longs fell 21,536 lots to 185,400 as Brazilian export competitiveness bit. Takeaway: the geopolitical risk trade is leaking out of grains just as it inflates in crude.

The watch items: the US midterm result and any US-Israeli decision on Iran, the tempo of strikes on Russian refineries, and the first cold-snap storage draw in northwest Europe.