Oil Plunges 8% to $88 as Midterm Results Raise Bets on an End to the Iran War
U.S. crude oil prices fell $7.97 a barrel Wednesday as traders bet that Democrats’ sweep of Congress would hasten an end to the war with Iran.
West Texas Intermediate settled down 8.3% at $88.12, and global benchmark Brent fell $8.98, or 8.7%, to $94.62, Reuters reported. Both closed at their lowest levels since Aug. 31.
Brent finished below $100 for the first time since Oct. 7 and posted its biggest daily drop since April, NBC News reported. The benchmark had traded as high as $118 on Friday.
Oil is down more than 14% this week after rising more than 10% in October, CNBC reported. Prices remain about 60% higher than at the start of the year.
Vice President JD Vance tied the Republican losses directly to the conflict. “The reason we lost is the war,” he said. “The president himself said so last night.”
Trump told Fox News that energy costs weighed on voters. “I think it’s the gasoline price,” he said. In NBC News exit polling, 59% of voters said they were “very concerned” about gas prices.
“The Democratic control of Congress could also tighten US military spending in the Middle East and further heighten the possibility of a peace deal sooner than later,” said Dennis Kissler, senior vice president of trading at BOK Financial.
Others were skeptical. “I’m more concerned that we can see an escalation in Iran sooner than a resolution,” said Carl Larry, who leads the trading and North America risk team at Enverus.
“It could be getting a bit overdone,” Rebecca Babin, a senior energy trader at CIBC, said of the drop, in comments to CNBC. Rapidan Energy Group’s Bob McNally warned that “Iran is hardened” after months of fighting.
Relief at the Pump May Take Time
The national average for regular gasoline stood at $4.12 a gallon Wednesday, according to AAA. That is about 39% higher than before the war began Feb. 28.
GasBuddy’s Patrick De Haan told NBC News the national average could fall below $4 a gallon in the “days ahead.” Diesel futures fell about 7% on Wednesday.
Supply data also pointed to tightness. The Energy Information Administration reported U.S. crude inventories fell 865,000 barrels last week to 409.8 million, Reuters reported, while analysts had expected an 877,000-barrel build.
Gulf crude exports slipped to 17.1 million barrels per day in October from 18.9 million in September, according to ship-tracking firm Vortexa.
Qatar stepped up mediation efforts after the U.S. elections, Reuters reported. A senior Iranian official told the news agency Tuesday that the two countries remain far from a deal to end the war.
Traders will watch for signals from the White House and the incoming Democratic majorities on war funding and diplomacy in the weeks before the new Congress is sworn in.
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