Markets
Brent Fell 8.7% to $94.60 as the Vote Hit the War Premium
Brent crude settled 8.7% lower at $94.60 a barrel on Wednesday, below $100 for the first time since early October, as traders bet Congress will push to end the Iran war.
The oil market read the midterms as a vote on the war. Brent crude futures settled at $94.60 a barrel on ICE on Wednesday, November 4, down 8.7% on the day, and US West Texas Intermediate closed at $88.12 on Nymex, down 8.3%. It was Brent's first close below $100 since early October, and the third straight loss: from $113.43 at the end of last week, the benchmark has fallen about 16.6% in three sessions.
Monday's fall had a cause in Tehran. Brent dropped 7.63% that day after President Masoud Pezeshkian said Supreme Leader Mojtaba Khamenei had authorised the government to pursue peace talks, and Qatari mediators flew in to meet Foreign Minister Abbas Araqchi. Wednesday's added a cause in Washington. With Democrats projected to win both chambers, traders priced a Congress that can pass resolutions, withhold funding or slow confirmations. "The Democrats' landslide victory has changed the political cost of continuing the Iran war," said Claudio Galimberti, chief economist at Rystad Energy.
The administration's own reaction reinforced the bet. Vice President JD Vance wrote on social media that "the real reason we lost is obvious to almost everyone", which was widely read as blaming the war, and Seb Barker, chief market strategist at Marshall Wace, expects members of Congress and people inside the administration to "begin to constrain President Trump's Iran war". Senate Minority Leader Chuck Schumer said Democrats would work with Republicans to end the conflict. The talks themselves remain unsettled: Qatar said it saw hope for an interim deal, while Iran's national security chief called the US response so far "not satisfactory".
What has not changed is the physical market. Sultan Al Jaber, chief executive of ADNOC, said this week that the world has drawn nearly 1 billion barrels from inventories since the war disrupted shipping through the Strait of Hormuz, and the Financial Times reported that prices could return above $100 if talks fail, given high freight costs and continuing disruption to Gulf exports. Goldman Sachs still sees a path to $140 Brent in 2027 if Gulf output stays 3.5 million barrels a day below its 2025 average. A fall this fast removes a risk premium; it does not refill the tanks.
The move spread through markets. The Energy Select Sector SPDR fund fell 4.7%, Exxon Mobil 4.6% and Chevron 3.7%, while the S&P 500 rose 1.58%. Brent is now about 20% below its $118.35 close of March 31, the highest since the war began, and was little changed near $94 early on Thursday. Lower oil also eases the inflation pressure that has kept central banks raising rates, which is why the Bank of England's decision on Thursday and next week's US CPI will be read partly through the barrel.