The United States and Israel have reportedly drawn up plans for military action against Iran after the US midterm elections on November 3, with energy infrastructure potentially included among the targets. Brent crude is now approaching $109 a barrel as markets reassess the potential impact of an escalation on supply, transport routes and inflation expectations.
The operation has not been confirmed. Earlier this month, the US halted an attack shortly before it was due to begin and shelved parts of plans prepared previously. Some officials have said energy facilities could be excluded from the target list because a rise in oil prices would push up petrol costs and increase pressure on consumers and governments.
Brent rose 27.9% in the week after the February conflict
Recent price action shows how quickly military operations can affect crude markets. After the US and Israel began their war against Iran on February 28, Brent climbed 27.9% in the following week. Based on current prices, Brent is nearly 50% above its closing level before the conflict began.
On July 8, Brent's daily settlement price rose 5.2% after the ceasefire ended and the US resumed its strikes. Oil also jumped on October 8. Most of that gain was retained even after the US pledged not to launch an attack before the election.
The relationship between crude prices and US Treasury yields has also strengthened. Their correlation has risen to one of the highest levels since the 1990s, indicating that energy-supply risks are spreading into broader financial markets through inflation expectations and interest-rate pricing.
Iranian energy sites could become retaliation targets
The strike plans could include Iran's nuclear programme, including the Pickaxe Mountain facility located deep beneath granite. Iranian analyst Peiman Salehi said Iran could respond by targeting Saudi refineries and use oil prices as a key means of putting pressure on the United States.
Mahdi Mohammadi, a senior adviser to Iran's negotiators, said the prospect of a US military operation lasting 72 hours was a fantasy. If the conflict were to spread to Saudi refineries or other regional energy infrastructure, market concerns would extend beyond a local supply disruption to possible damage to Gulf shipping routes and refining capacity.
US military preparations are not yet fully in place. A broader reinforcement, including three aircraft carriers, is expected to be completed only in early November, while Israel is due to hold elections on October 27. If Prime Minister Benjamin Netanyahu fails to win, the country could be led by a caretaker government, potentially narrowing the room for decisions on military action.
US officials have previously said that military operations could resume after the election. Markets must still assess whether an attack actually begins, whether energy infrastructure is included among the targets, and how Iran and other regional states respond. Until those facts become clearer, Brent will remain sensitive to both geopolitical headlines and expectations of supply risk.