Oil jumps as traders eye fresh US-Iran flashpoint after midterms

Oil pushed higher Friday, with Brent crude futures rising 1.67% to land at $99.90 a barrel and US West Texas Intermediate up 1.43%, sitting at $91.69. The rally has traders gaming out two very different futures: another shooting war with Iran, or a deal that lets barrels keep flowing.

The midterm elections are in the rearview, and investors are now asking whether that clears the way for Washington to take fresh action against Tehran — a move that could put Middle East supply lines in the crosshairs. Against that, Reuters reported that Iran sent a nuclear proposal to Washington through Qatar, citing a senior Iranian official, giving markets a sliver of diplomatic hope.

Bob McNally, founder and president of Rapidan Energy Group, told CNBC's Squawk Box Asia he puts an 80% probability on military fighting resuming, and expects both benchmarks to break above $100 a barrel. In his telling, the gap between the two sides is too wide to bridge. President Donald Trump is set on stopping Iran from getting a nuclear weapon 'almost at all costs,' McNally said, while Tehran won't give up its nuclear capabilities.

'As long as that core difference in that deal space is absent, the escalation dynamic remains in place,' McNally said. Lombard Odier chief economist Samy Chaar and head of investment strategy Luca Bindelli share that read, per CNBC.

The physical risk is already showing up on the water. Iran reported three more attacks on oil tankers in the Strait of Hormuz on Thursday, and data from the UK Maritime Trade Operations (UKMTO) showed vessel attacks running at a near-record pace.

With Brent hovering just under $100 and analysts talking about a break higher, the next few weeks of US-Iran signalling — talks or missiles — look set to decide which way crude goes next.