Oil Slips as Markets Weigh US Midterm Results and a Tanker Attack Off Oman

Brent crude futures were down 0.84 per cent at $102.70 a barrel at 03:30 GMT, and US West Texas Intermediate futures were down 1.06 per cent at $95.03. Brent fell more than 1 per cent on Tuesday to close at its lowest level in nearly four weeks. That followed a 3.3 per cent drop earlier in the week after President Donald Trump said US military aid to Israel would end this year.

The Associated Press reported that Democrats had won control of the Senate, a result AGBI described as a rebuke to Trump. All 435 House seats, 35 of the 100 Senate seats and 36 governorships were on the ballot, with almost 210 million people registered to vote.

Shipping Risk in the Gulf

The security situation around Gulf shipping lanes remains tense. The United Kingdom Maritime Trade Operations agency said two projectiles hit a tanker northeast of Oman, and attacks in the Strait of Hormuz have increased since last month. Major General Ali Abdollahi, chief of staff of Iran's armed forces, said Tehran controls the strait and can set the rules for access to it, according to Iran's Tasnim News Agency.

CNN, citing three unnamed US officials, reported that the US military carried out limited strikes on Iran's Qeshm Island on Monday after Tehran fired at a US aircraft. Trump earlier told Axios he was "in no rush" to decide whether to resume fighting in Iran. Iranian president Masoud Pezeshkian said his country remains committed to peaceful engagement but will not accept coercion, the IRNA news agency reported.

Fighting between Saudi Arabia and the Houthi militia also continued. The Saudi state news agency SPA said a drone was intercepted in the Mecca region, which the Houthis denied, while the group said it had struck Abha International Airport.

At the Gateway Gulf forum in Bahrain on Sunday, GCC secretary-general Jasem AlBudaiwi said US claims that the strait could become irrelevant to global trade within two years were "illogical", arguing that pipelines and railways cannot replace it.

Gulf stock markets closed mixed on Tuesday. Saudi Arabia, Abu Dhabi and Oman fell, while Dubai, Qatar, Bahrain and Kuwait rose.

The market reaction combines two separate risks for Gulf economies: a possible change in US policy towards the region after the midterms, and the continuing threat to shipping through the Strait of Hormuz, a key route for the region's oil exports.