In a report to Rigzone late Tuesday, Standard Chartered Bank Commodities Research Head Paul Horsnell and his team indicated that oil prices are likely to rise following the U.S. election. Analysts expressed concern that the period before the presidential inauguration on January 20, 2025, may see increased actions against Iran, potentially targeting energy infrastructure.
The analysts warned against assuming Iran would respond passively. They foresee a risk of prolonged retaliatory attacks, with little chance for immediate military or diplomatic resolution.
They noted that short-term oil price risks remain on the downside, but post-election, these risks may shift upwards as the geopolitical situation grows more complex. In the past year, the market has often downplayed escalations in Middle East tensions, and analysts caution that recent sell-offs may reflect premature optimism.
The report outlined two main reasons for potential further action against Iran. First, Israel appears far from meeting its stated goals against Iran’s military and economic assets. Second, following the election, there may be greater scope for military and economic actions that could affect energy markets, without immediate electoral consequences for the U.S. government.
The analysts advised caution in drawing geopolitical conclusions from oil price movements, noting inconsistency in market responses to crises. For instance, while some initially suggested traders weren’t expecting an Iranian attack, others cited that the recent drop in oil prices stemmed from a less severe-than-expected attack.
Although energy infrastructure was not directly targeted in the latest Israeli missile strikes on Iran, the report highlighted possible indirect damage, including to air defenses near the Bandar Imam Khomeini petrochemical plant, storage at the Abadan Oil Refinery, and a refinery near Tange Bijar gas field. Damage to defenses may leave energy infrastructure vulnerable to future attacks, an issue analysts say the market may be underestimating.
Standard Chartered noted recent high volatility in oil prices. On October 27, Brent crude volatility hit 44.5 percent, a two-year peak, and on October 28, European gas prices similarly spiked. Despite volatility climbing since July, analysts argue it remains modest given current geopolitical risks, suggesting prices may see further swings.
In a separate analysis shared with Rigzone, XS.com Senior Market Analyst Samer Hasn predicted that further escalations could follow the U.S. election. He pointed out that recent Israeli actions may signal preparations for more direct attacks on Iranian oil facilities. Hasn noted that while Iran has vowed to retaliate, this could invite further Israeli responses, potentially threatening oil supplies and navigation in the Strait of Hormuz. He also suggested that a Trump return to the presidency could heighten Israeli focus on Iranian oil or nuclear targets.
The U.S. election is scheduled for November 5. With neither candidate seen holding a significant edge, the oil market may continue to experience uncertainty and volatility in the weeks ahead.
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