Rapidan Energy expects oil prices to rise as risk of US and Iranian military action increases

The United States is likely to resume military action against Iran within days, a move that could send oil prices soaring, said Bob McNally, CEO of geopolitical and energy analysis firm Rapidan Energy Group.

Speaking on CNBC’s “Squawk Box Asia,” McNally said there was an 80 percent chance of “military fighting resuming” as the U.S. midterm elections retreat.

McNally said he expects both. brent and west texas intermediate Crude oil futures will rise above $100 per barrel. The benchmarks are currently trading at around $100 and $91, respectively.

Oil prices had soared above $100 ahead of the midterm elections as investors weighed uncertainty surrounding the Iran conflict and the risk of further U.S. military action.

US officials said President Donald Trump had previously said he had no intention of launching a new attack on Iran before the election, but the Wall Street Journal revealed that Washington carried out a limited attack.

“As a legacy item, President Donald Trump is determined to prevent Iran from acquiring a nuclear weapon and to force it to abandon its nuclear capabilities at almost any cost,” McNally said.

“The Iranian regime, on the other hand, is unwilling to respond, and unless there are core differences in the scope for that agreement, the dynamics of escalation will remain in place,” he added.

McNally’s view is echoed by other analysts, including Lombard Odier’s chief economist Sammy Chaar and head of investment strategy Luca Bindelli.

They said in a Nov. 4 document that a “lame duck” period before the new Congress is sworn in could give President Trump time to resume attacks on Iran. However, new operations may be limited in duration and effectiveness by pressures on U.S. military supplies.

Other analysts believe the interim results will provide more room for diplomacy.

Norbert Rücker, head of economics and next generation research at Julius Baer, ​​said markets were “increasingly confident” that the end of the midterm elections could provide a diplomatic outlet rather than leading to a new escalation.

The possibility has increased after Reuters reported on Friday, citing a senior Iranian official, that Iran had reportedly sent a nuclear proposal to the United States through Qatar.

But the proposal will only be mooted after Washington meets what Tehran calls its “seven demands,” including an end to U.S. “acts of aggression,” a naval blockade of Iranian ports and what it calls economic warfare, and the release of Iranian assets.

In return, Iran will allow ships to freely navigate the Strait of Hormuz.

The official also told Reuters that Washington was considering the proposal but declined to provide further details.

Growing political influence

Separately, Iranian Parliament Speaker Mohammad Berger Ghalibaf criticized US Vice President Vance after he blamed the Republican Party’s mid-term losses on the war with Iran.

In a post to He also accused the Trump administration of preparing the next phase of the conflict.

“Please stop giving TED Talks. Why don’t you say this to your boss?” Ghalibaf wrote, in an apparent reference to Trump.

“The reason we lost is the war. The President himself said it last night,” Vance wrote on Nov. 4, adding that according to pollsters he consults, ending the war is the No. 1 issue cited by former Trump voters who have switched to the Democratic Party. Cost of living and inflation were also among these concerns.

Mr. Vance has at times promoted diplomacy with Iran. The Wall Street Journal reported last week that he had been in contact with Iranian hardliners in an effort to restart peace talks.

The war has also contributed to rising global energy costs, fueling widespread concerns about inflation and the cost of living.