Following a heavy defeat for the Republicans, uncertainty surrounding a potential war with Iran has driven up oil prices
As Trump’s Republicans suffered a major setback in the midterm elections, uncertainty regarding a conflict with Iran pushed oil prices higher, with the market showing volatility during Wednesday’s trading session.
Markets are closely monitoring discussions aimed at ending the conflict involving the U.S., Israel, and Iran.
As of 05:10 GMT, Brent crude futures rose by 82 cents (0.8%) to $104.42 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures gained 50 cents (0.5%) to reach $96.59, recovering from earlier losses.
In the previous session, Brent crude had closed at its lowest level in nearly four weeks, as investors weighed ongoing talks aimed at resolving conflicts in Ukraine and Iran.
With the vote count for the U.S. midterm elections still underway, the Democrats have secured a majority in both chambers of Congress, effectively taking control for the remainder of Trump’s second term.
Trump has sent mixed signals—continuing military strikes while simultaneously suggesting that tensions will not escalate further and offering messages of reconciliation—making it difficult for investors to form a clear outlook on the market's direction.
Given the sharp rally seen in October, the current profit-taking and reduction in speculative long positions appear reasonable. The risks of a major supply disruption around the Strait of Hormuz have not been eliminated. Furthermore, an unexpected decline in U.S. crude oil inventories is providing fundamental support to the market.
The U.S. announced that it had carried out "defensive" strikes targeting surface-to-air missile systems—used against American assets—on the Iranian-controlled island of Qeshm. However, officials indicated that the strikes appeared limited in scope and did not signify a return to large-scale combat operations.
Markets remain closely focused on potential progress in talks aimed at ending the conflict between the U.S./Israel and Iran, even as Qatar intensifies its mediation efforts to prevent an escalation of hostilities following the U.S. elections.
A senior Iranian official stated on Tuesday that Iran and the United States remain very far from reaching an agreement to end the conflict between them.
In a statement on Tuesday, Trump indicated that the U.S. has no immediate plans to launch an attack on Iran.
The unexpected drop in U.S. crude oil inventories is offering some support to prices. According to data from the American Petroleum Institute (API), crude oil stocks fell by 5.27 million barrels for the week ending October 30. Analysts had expected an average increase of 880,000 barrels in crude inventories.
Sources noted that gasoline inventories rose by 1.43 million barrels, while stocks of distillate products decreased by 1.19 million barrels compared to the previous week.
While diesel inventories remain at low levels, gasoline stocks have increased more than anticipated. The data is generally supportive of oil prices.
Official figures from the U.S. Energy Information Administration (EIA) are expected to be released on Wednesday at 15:30 GMT.
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