No resolution in sight for Iran, Ukraine wars before US midterms as oil, grain prices surge

Concerns over oil and grain prices are growing as analysts see little prospect of meaningful de-escalation in either the US-Iran war or the Russia-Ukraine war before the US midterm elections. International oil prices are expected to climb further heading into winter, when heating demand surges, even as Saudi Arabia works to restore crude export volumes disrupted by recent attacks — efforts widely seen as insufficient to offset the shortfall.

According to Bloomberg, Iranian officials privately expressed pessimism Monday about the likelihood of reaching a ceasefire or end-of-war agreement with the United States before the November midterms. Iran had recently proposed a "seven-day plan" under which it would reopen the Strait of Hormuz for seven days if the US halted hostilities, but Washington rejected the offer. Iran said it was nonetheless awaiting a formal US response.

Bloomberg noted that the dramatic diplomatic breakthrough many had anticipated from Iranian President Masoud Pezeshkian's attendance at the UN General Assembly failed to materialize. Iranian officials now believe the conflict is more likely to intensify after the US midterms than to wind down before them. Foreign Minister Abbas Araghchi remained in the United States after the General Assembly to hold further talks with mediating countries, with additional consultations scheduled Monday — though the US was not participating directly.

If the Iran war fails to produce any meaningful de-escalation before the midterms, international oil prices are expected to resume their upward trajectory ahead of a winter of sharply rising heating demand. Saudi Arabia has partially restored its east-west pipeline, which was struck in a drone strike, and resumed Red Sea exports, but pipeline volumes are still reported to be roughly half of pre-attack levels. Brent crude jumped 2 percent Monday to around $106.20 a barrel before paring gains to $105.28.

Ukraine also signaled that a ceasefire covering the Black Sea region — including a halt to airstrikes — was unlikely within the coming months. Ukrainian Agriculture Minister Taras Vysotsky, speaking to Bloomberg in Brussels on Monday, said it was "hard to imagine a solution to this issue" emerging in the near term. "We have to be prepared for things to continue as seriously as they are now," he said.

The Black Sea is the main export corridor for grain from both Russia and Ukraine, which together account for a quarter of global wheat shipments. After Russia's invasion of Ukraine, the two countries, along with Turkey and the UN, signed the Black Sea Grain Initiative in July 2022 to keep wheat exports flowing. The deal enabled more than 32 million tons of grain and food to reach 45 countries through the Black Sea even amid the fighting, but it collapsed in July 2023 when Russia refused to renew it. Mutual strikes between Russia and Ukraine have since intensified, leaving Black Sea ports increasingly exposed to bombardment.

Continued fighting in the Black Sea region points to a sharp rise in grain prices. Ukraine has been using alternative routes to maintain 45 percent of its grain export capacity, but even at maximum use those detours can handle only up to half of pre-war export volumes.