Yields are above multidecade highs, both gas and diesel prices continue to climb, and critical midterm elections are around the corner.
Adding to pressure on the US economy and the current administration, the world’s two largest hot wars are heating up.
‘Iran knows when the midterms are too’
In the Middle East, dual fronts along the Strait of Hormuz and the Red Sea have seen a resurgence of conflict in recent weeks that has heavily disrupted oil flows in the region.
Multiple tankers and container ships in the Strait of Hormuz either caught fire or sank this week in the Iran-dominated waterway. The Washington Institute has tracked more than two dozen attacks recorded since the start of the month.
President Trump has said the US military won’t resume airstrikes inside Iran before the midterm elections as White House negotiators continue angling for a diplomatic solution to the conflict now in its eighth month.
Read more: How to protect your money as Mideast turmoil fuels market volatility
At the same time, administration officials are reportedly war-gaming a major offensive to come after the November elections, when the president will be less encumbered by the political needs of the Republican Party.
“The Trump Administration does not want Brent crude oil at $106/bbl going into the midterm elections, just a month away, and has said that he only plans to escalate offenses against Iran after the midterms are over, with what he hopes to be, a red wave,” Rabobank cross-asset macro strategist Molly Schwartz said in a recent note to clients.
To the west along the Red Sea, Yemen’s Houthi militants have sharply escalated their campaign against the Saudi coalition opposing the group’s bid for wider territorial control, launching multiple rounds of strikes on major airports inside the kingdom that have killed more than a dozen people and wounded hundreds.
Houthi militants recently struck an office building belonging to the state-managed oil giant Saudi Aramco (2223.SR). While the kingdom’s oil production remains largely undisrupted, violent pestering by the Iran-allied Houthis is driving up oil prices.
“Iran knows when the midterms are too,” Schwartz added, “and if they want to further complicate Trump’s plans, now is the perfect time to have the Houthis stir up trouble and make it increasingly difficult for the US to avoid intervening.”
Ukraine, Russia, and Starlink throttling
Ukraine and Russia, which have been at war since Russia executed a stealth annexation of Crimea in 2014 and invaded its neighbor in February 2022, recently both escalated offensive strikes against critical infrastructure ahead of another winter.
