Oil futures are down nearly 0.3 percent across both main benchmarks

(MENAFN- MENAFNEditorial) Oil futures are down nearly 0.3 percent across both main benchmarks, with West Texas Intermediate trading near its highest level in a month and Brent hovering near its highest since May.
The market still appears to be pricing in high risks of renewed, widespread crude supply losses from the Middle East, given compounding escalation factors across multiple fronts. In the near total absence of diplomacy and the emergence of further escalation factors, the risks of supply disruption could remain the main obsession, overriding optimism that might stem from any temporary measures aimed at lowering prices through inventory releases or sanctions waiver for Russia, as well as diminishing the optimism surrounding the restoration of flows from the region to pre-war levels.
On the Iranian side, the Washington Post reported, citing Iranian officials and diplomatic sources in the region, that the Islamic Republic intends to inflict maximum political damage on President Donald Trump by escalating attacks in the Strait of Hormuz ahead of the midterm elections, believing it is capable of bringing down his presidency. Iran aims to send a message to future US presidents that attacking it will carry a high political cost that could reach losing elections. This comes at a time when Iran faces suffocating economic pressures that could reach the point of being unable to maintain basic state functions or even pay security forces within a few months.
These offensive motives for Iran might not only involve accelerating the pace of attacks against oil tankers in the strait. Still, they could also demand an exaggerated retaliatory response from Trump, given the level of political defeat he might face. This potential escalation over the next few days and weeks could ultimately involve deeper targeting of energy infrastructure, oil production, export, and refining facilities across the region, whether in Iran or Arab states. This has already happened and continues to happen. If the pressure currently holding Trump back from escalating fades, these strikes on energy facilities will be unprecedented if the conflict spirals out of control. This could become an obsession for the market, as millions of barrels flowing daily from the region could quickly vanish if the situation deteriorates, amid the absence of dialogue and both sides holding fast to their maximalist demands.
Not only that, but the front between Saudi Arabia and the Houthis in Yemen does not appear to be moving toward de-escalation. On the contrary, the Washington Post reported earlier this week, citing officials, that the leadership of the internationally recognized Yemeni government, supported by the Kingdom, sees military resolution as the only option, and that negotiations are not on the table now and no one is talking about them. I believe this might be the Kingdom's only option now, which is to go far in escalating with the Houthis given the blockage of diplomatic channels and its direct link to Iran's own war, which uses this front as a leverage point against the United States and the region.

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