LONDON, Nov 5 (Reuters) - Brent crude futures rose nearly $3 on Thursday .as investors weighed the future course of the US-Israeli war with Iran after President Donald Trump's Republican Party suffered heavy losses in midterm elections this week.
Brent futures were up $2.94, or 3.11%, at $97.56 a barrel as of 1417 GMT, while US West Texas Intermediate crude futures rose $1.73, or 1.96%, to $89.85.
"The situation in the Middle East is still unresolved and that's why there is some modest recovery in prices at the moment," said Giovanni Staunovo, commodity analyst at UBS.
Both prices tumbled by more than 8% in the previous session to settle at their lowest since August 31.
The conflict with Iran, which Trump launched alongside Israel in February, and the resulting higher fuel prices for US consumers were major grievances for voters in Tuesday's rout of Republicans.
"Markets are assessing the impact of the midterm elections on Donald Trump's next steps with the Iran war, pricing in more likelihood for the war to end," said June Goh, senior oil analyst at Sparta Commodities.
"However, there will be more volatility ahead as the path to full diplomacy to end the war is still wrought with many unknowns while the global strategic reserves have drawn very thin," she said.
Uncertainty remains before the new Democratic-controlled Congress takes office in January, analysts said.
Citi said in a note there were concerns that with the midterms over, the White House could focus on its executive powers in foreign policy and potentially escalate conflict with Iran.
Eurasia Group lowered its estimate for the chance of renewed US strikes on Iran to 60% from 65%, but also cut the probability of a deal to 10% from 20%, as Iran has held firm on its demands and Trump is unlikely to accept terms seen as a defeat. It raised the likelihood of a continued standoff to 30% from 15%.
Despite the recent drop in oil prices, escalation is likely to produce a sharper increase into a band of $110 to $125 per barrel for Brent, Eurasia Group said in a note.
Meanwhile, Iran's Foreign Minister Abbas Araqchi discussed in separate phone calls with his Saudi and Qatari counterparts the "latest progress" in diplomatic efforts aimed at establishing stability in the region, the Iranian foreign ministry said.
Iran's Islamic Revolutionary Guard Corps said on Thursday that two oil tankers and a tugboat had caught fire in separate incidents after attempting to use unauthorised routes through the Strait of Hormuz.
Crude shipments through this key waterway for most Gulf oil supplies have recovered to close to pre-war levels, according to analysts, though at a higher cost.
Reporting by Anna Hirtenstein in London. Additional reporting by Siyi Liu in Singapore; Editing by Joe Bavier, Louise Heavens and Susan Fenton
Source: Reuters