Oil prices steadied after rising for two consecutive sessions. The United States is considering deploying an additional carrier strike group to the Middle East, a move that could escalate the war against Iran and potentially hinder the recovery of energy flows.
Brent crude for December delivery traded above $102 per barrel, following a cumulative gain of more than 6% over the previous two trading days, while West Texas Intermediate (WTI) approached $93 per barrel.
A US official said the Pentagon may send an additional aircraft carrier along with 10,000 sailors and Marines to the Persian Gulf, providing more military options should President Donald Trump decide to intensify strikes on Iran.
Crude oil futures swung sharply this week as traders weighed improving energy flows in the Middle East against the risk of escalation. The US-Iran war has entered its eighth month, with no clear progress in diplomatic negotiations, and Brent crude is up nearly 70% year-to-date.
ANZ analysts Brian Martin and Daniel Hynes said in a research note: "After six months of sustained destocking, inventories are at low levels, and the crude oil market is highly vulnerable to another price spike. Investors are increasingly concerned that Iran will target US assets and energy infrastructure in response to the US military deployment in the region."
Adding to the concerns, the United Kingdom Maritime Trade Operations said it received a report that an oil tanker was struck by an unidentified flying object while transiting the Strait of Hormuz. The agency said the extent of damage to the vessel and the environmental impact remain unclear.
Tensions have risen again just as market concerns about Middle East supply had only recently eased. Wall Street analysts said earlier this week that crude flows in the region had approached pre-war levels, but fuel supply had not recovered to the same extent.
Meanwhile, Iran appeared to have loaded no crude onto tankers in September, the latest signal that the US maritime blockade has cut off Iran's access to global energy markets.
According to people familiar with the matter, to ease fuel supply tightness, the Trump administration is pressuring the European Union to release diesel reserves as a way to avoid US export restrictions. US Treasury Secretary Scott Bessent urged European partners to help alleviate the global fuel shortage.