Oil prices fell sharply on Wednesday, with Brent crude settling nearly 9% lower at its lowest level in more than two months, after Democrats swept the US midterm elections and investors bet the result would hasten an end to the war with Iran. Brent futures settled $8.98, or 8.7%, lower at $94.62 a barrel, while US West Texas Intermediate (WTI) crude fell $7.97, or 8.3%, to $88.12, according to Reuters. Both benchmarks closed at their lowest since 31 August, and prices fell further on Thursday, extending the slide to a fourth consecutive session.
The sell-off was the market's verdict on a single political fact: the Republican Party lost control of both chambers of Congress in Tuesday's midterms, an election widely seen as a referendum on affordability and on a war that has pushed oil prices about 50% higher this year. Traders moved to price out the "war premium" — the extra cost built into crude while the conflict threatened supplies through the Strait of Hormuz.
The numbers behind the fall
Brent, the global benchmark, dropped as much as 10% during Wednesday's session to a low of $93.22 a barrel, its lowest in two months, before settling at $94.62, Bloomberg reported. WTI slipped below $90. On Thursday, Brent traded around $93.82–$93.90 and WTI near $86.92–$87. If the losses hold through Friday's close, Brent is on course for its steepest weekly decline in more than six years.
| Benchmark | Wednesday settlement | Daily change | Thursday level |
|---|---|---|---|
| Brent crude | $94.62 a barrel | −$8.98 (−8.7%) | ≈ $93.82–$93.90 |
| WTI crude | $88.12 a barrel | −$7.97 (−8.3%) | ≈ $86.92–$87 |
Technical factors amplified the move: trend-following commodity trading advisers cut their long positions in Brent to about 55% from 73% at the start of the session, according to data from Kpler's Bridgeton Research Group cited by Bloomberg.
Why traders are betting on an exit from the war
The market logic runs through Washington. A Democratic Congress can pass resolutions, hold back war funding and delay confirmations, narrowing President Donald Trump's room to escalate the conflict with Iran. "With both chambers now capable of passing resolutions, holding back war funding and delaying confirmations, the administration faces a shorter political runway and greater institutional pressure to find a Hormuz deal," Claudio Galimberti, chief economist at Rystad Energy, told Bloomberg.
Trump himself gave traders reason to think a deal is now more likely. He told the Financial Times on Tuesday that the United States had no immediate plans to strike Iran, and on Wednesday acknowledged that the war had played a role in his party's sweeping defeat. Vice-President JD Vance went further, distancing himself from the decision to go to war and blaming it entirely for the electoral rebuke, while Senate Minority Leader Chuck Schumer has pledged to end the war, saying some Republicans would back the effort.
"With this election result and Iran's economic situation, it does seem like a deal is more likely than not. Trump's strength is reduced considerably." — Ajay Parmar, director of energy at ICIS, speaking to Bloomberg
Two sources close to Gulf government circles told Reuters that a weakened Trump now has greater incentive to seek a negotiated exit, and that a full-scale assault on Iran looks less likely. Qatar has stepped up mediation efforts to avert a renewed escalation after the US elections.
The war premium, explained. Oil has risen about 50% this year as the war disrupted supplies and threatened the Strait of Hormuz, the narrow waterway through which a large share of the world's seaborne oil moves. A war premium is the extra price traders pay for the risk that those supplies could be cut off. When the perceived risk falls — as it did after the midterms — that premium drains out of the price, even if no oil has actually moved yet.
The supply picture was already loosening
The sell-off was not only about politics. JPMorgan said in a report that the global oil market had returned to a surplus in October, with an overhang of about 1.4 million barrels a day. Gulf exports of crude, condensate and refined products — excluding liquefied petroleum gas — averaged 17.1 million barrels a day in October, according to ship-tracking data from Vortexa cited by Reuters, down from 18.9 million in September but still roughly three-quarters of pre-war levels. Flows through the Strait of Hormuz are holding near pre-war levels, and Saudi Aramco said it would maximise oil production this quarter, chief executive Amin Nasser said on Tuesday.
US stockpiles, meanwhile, tightened: the US Energy Information Administration said crude inventories fell by 865,000 barrels to 409.8 million barrels in the week ended 30 October — against analysts' expectations in a Reuters poll for a rise of 877,000 barrels — and domestic diesel stockpiles dropped below 100 million barrels for the first time since 2003.
What could still go wrong
Not a done deal. A senior Iranian official told Reuters on Tuesday that Iran and the United States remain far from a deal to end their war. Gulf analysts cautioned that an agreement allowing Iran to claim a clear victory — and leaving Trump looking defeated — could provoke recklessness as readily as restraint. "The elections are giving bears a reason to cast doubt on a continuation in Iran… I'm more concerned that we can see an escalation in Iran sooner than a resolution," Carl Larry, who leads the trading and North America risk team at Enverus, told Reuters.
There is also a limit to how much relief cheaper crude can bring quickly. Diesel stockpiles in the US are at their tightest in more than two decades, and the incoming Democratic Congress does not take office until January. For American consumers, the backdrop is stark: petrol prices averaged more than $4 a gallon as voters cast their ballots on Tuesday — exceeding that level on an election day for the first time on record, according to Bloomberg. Cheaper crude, if it holds, would eventually ease that pressure at the pump, but the pass-through takes weeks, not days.
Frequently asked questions
Why did oil fall after the US midterms?
Investors bet that a Democratic Congress will push the Trump administration toward a negotiated end to the war with Iran, removing the "war premium" that had pushed oil about 50% higher this year.
How far did prices fall?
Brent settled 8.7% lower at $94.62 a barrel on Wednesday, its lowest since 31 August, after touching $93.22 intraday. WTI fell 8.3% to $88.12. Both fell further on Thursday, the fourth straight daily decline.
Does this mean the Iran war is ending?
No. A senior Iranian official told Reuters the two sides remain far from a deal, and analysts warn escalation is still possible. The market is pricing in a higher probability of a deal, not a done deal.
Will petrol prices fall now?
Eventually, if crude stays lower — but the pass-through to the pump takes weeks, and US diesel stockpiles are at their tightest since 2003.
Key takeaways
- Brent crude settled 8.7% lower at $94.62 a barrel on Wednesday — its lowest since 31 August — after Democrats won both chambers of Congress in the US midterms.
- Traders are betting the result raises the odds of a negotiated end to the war with Iran, draining the war premium that lifted oil about 50% this year.
- Trump said the US had no immediate plans to strike Iran; Vance blamed the war for the Republican defeat; Schumer has pledged to end it.
- Supply is already loosening: JPMorgan put the global market at a surplus of about 1.4 million barrels a day in October.
- Caution remains: Iran and the US are "far from a deal", according to a senior Iranian official, and analysts warn a deal could provoke recklessness as readily as restraint.
What to watch next
Three things will decide whether this is a lasting reset or a one-week trade: Friday's close, which would mark Brent's steepest weekly fall in more than six years; any statement from Washington or Tehran on negotiations, with Qatar's mediation the channel to watch; and the next US inventory report, which will show whether the tightening in diesel stocks is easing or getting worse. Until a deal is actually signed, the war premium can return as fast as it left.
