Tensions between the U.S. and Iran could escalate in the coming days, potentially pushing oil prices above $100 per barrel, according to Bob McNally, CEO of Rapidan Energy Group. Speaking to CNBC's "Squawk Box Asia," McNally estimated an 80% chance of renewed military action as the U.S. midterm elections fade. He expects both Brent and West Texas Intermediate crude futures to surpass $100 and $91, respectively, where they are currently trading.
McNally emphasized President Donald Trump's determination to prevent Iran from acquiring nuclear capabilities, a stance that clashes with Iran's unwillingness to abandon its nuclear ambitions. This fundamental disagreement keeps the risk of escalation high. Other analysts, including Lombard Odier's Samy Chaar and Luca Bindelli, agree that the "lame duck" period before the new Congress could provide an opportunity for Trump to resume strikes against Iran, though such actions might be limited by U.S. munitions supply constraints.
Some analysts, however, see the midterm results as opening a window for diplomacy. Norbert Rücker of Julius Baer suggested that the market is increasingly convinced the end of the midterms could lead to a diplomatic resolution rather than further escalation. This view gained traction after Iran reportedly sent a nuclear proposal to the U.S. through Qatar, though Tehran has set conditions, including an end to U.S. aggression and the release of Iranian assets.
Political fallout from the conflict has also intensified. Iran's parliament speaker, Mohammad Bagher Ghalibaf, criticized U.S. Vice President JD Vance for blaming the war with Iran for Republicans' midterm losses. Ghalibaf accused the Trump administration of preparing for further conflict, while Vance has at times advocated for diplomacy with Tehran. The war has contributed to higher global energy costs, exacerbating concerns over inflation and the cost of living.