Oil set for sharp weekly drop but Middle East supply concerns provide floor

Brent crude futures for January rise $1.29, or 1.31%, to $99.58 a barrel

Oil prices are set for a sharp weekly drop on expectations of a de-escalation of the Iran war ​after US President Donald Trump's party suffered election losses, but Middle East supply ‌concerns from the conflict continue to provide a floor for the market.

Brent crude futures for January rose on Friday by $1.29, or 1.31%, to $99.58 a barrel as of 0504 GMT. US West Texas Intermediate ​futures climbed 86 cents, or 0.95%, to $91.38 a barrel. Brent briefly breached ​the $100-a-barrel mark in morning trade.

Both contracts gained for a second day.

Still, the ⁠Brent contract is on track to drop by 12% this week after the December ​contract expired on October 30, while WTI is set to drop 12.1%.

Read: Oil rises on Iran war uncertainty after Trump's Republicans face election rout

The contracts plunged ​earlier this week on expectations that US midterm elections on Tuesday, which swung the Senate and House of Representatives to the Democratic Party from Trump's Republicans, could lead to a de-escalation of the US-Israeli ​war against Iran, now in its ninth month.

Oil prices fell 8% on Wednesday alone after ​the Democrats swept the elections, settling at two-month lows.

However, prices rebounded on a surge in tanker attacks ‌on ⁠Wednesday and Thursday in the Gulf and the Strait of Hormuz — the crucial sea outlet for a majority of Middle Eastern oil shipments — that renewed the concerns about supply flows from the region.

Read more: Oil falls for a fourth day on expectations for lower risk of Iran war escalation

KCM chief analyst Tim Waterer described Friday's rise as a "technical recovery" ​from the steep selloff ​after the US ⁠elections, but said the underlying driver was a realisation that the problem had not disappeared and attacks in the Strait of Hormuz ​were unaffected by a Democratic win.

"Until there is a credible ​path to ⁠safer, cheaper transit through the Gulf, oil is likely to remain supported on dips and prone to sharp moves on any escalation headlines," he said.

Iran said on Thursday that three ⁠more tankers had ​been attacked in the Strait of Hormuz, and ​data from Britain's maritime security agency UKMTO suggested that attacks on oil-carrying ships are still running at close ​to record pace.