Oil plunges 8.5% after US midterms give Democrats Congress control

Global oil prices fell sharply on Wednesday following the U.S. midterm elections, with Brent crude declining 8.5% to $94.79 per barrel and West Texas Intermediate dropping 8.3% to $88.09 per barrel—marking one of the steepest single-day declines in recent weeks. The sell-off was driven primarily by investor expectations that Democratic control of Congress could constrain further military escalation in the U.S.-Israeli conflict with Iran and potentially accelerate peace negotiations.

President Donald Trump and Vice President JD Vance both attributed the Republican Party's electoral losses partly to the Iran war and its impact on gasoline prices. Trump told the Financial Times that the United States had no immediate plans to strike Iran, while Vance stated on social media that any discussion of future policy "must start" with acknowledging the war's role in the midterm defeat. Democratic leaders, including Senate Minority Leader Chuck Schumer, pledged to work toward ending the nine-month conflict. Iranian Supreme Leader Ayatollah Khamenei countered in a written statement that U.S. hostility would persist regardless of which political party holds power, while a senior Iranian official told Reuters that Iran and the United States remain far from reaching a deal.

Market analysts attributed the price decline to multiple factors. Middle Eastern crude exports recovered to 17.1 million barrels per day in October, down slightly from 18.9 million in September but still representing roughly three-quarters of pre-war levels, according to ship-tracking data. BOK Financial Securities analysts noted that rising Middle East exports combined with Trump's statements of restraint were keeping pressure on crude. Profit-taking and a reduction in speculative long positions followed the sharp October rally that had pushed Brent to six-month highs. However, traders faced conflicting signals: defensive U.S. strikes on Iran's Qeshm Island continued even as officials downplayed imminent escalation, and unconfirmed Qatari media reports of significant progress in U.S.-Iran negotiations were quickly dismissed by Iranian officials.

U.S. crude inventories fell 900,000 barrels to 409.8 million in the week ended October 30, coming in 4% below the five-year average, while distillate stocks dropped 3.6 million barrels to 13% below the five-year average. Despite the sharp inventory draws, refined product exports from Middle Eastern refineries remained subdued, suggesting that relief at the pump for consumers may take longer to materialize. To address diesel shortages—with prices exceeding $6.50 per gallon—the Energy Department announced it would loan 300,000 barrels from the Northeast Home Heating Oil Reserve to four companies, equivalent to nearly a third of that stockpile. Democratic control of Congress could tighten U.S. military spending in the region and bring a peace deal sooner, analysts said, though escalation remained possible before any resolution.