Oil prices fell for a fourth consecutive day on Thursday, extending a rout that has wiped almost a fifth off the price of Brent crude in a single week, as markets reassessed the course of the war between the United States, Israel and Iran after the Democrats’ sweeping midterm victories.
Brent futures fell 97 cents, or 1.03 per cent, to $93.65 a barrel in early Asian trading, while US West Texas Intermediate crude dropped $1.14, or 1.29 per cent, to $86.98. Both benchmarks had already tumbled by more than 8 per cent in the previous session, closing at their lowest levels since 31 August.
The speed of the reversal is striking. Brent is down close to 20 per cent so far this week and WTI about 15 per cent. If those losses hold through Friday’s close, it would be the largest weekly decline in oil prices since April 2020, when US crude briefly traded below zero at the height of the pandemic.
Traders are betting that a weakened President Donald Trump, now facing a Democratic Congress able to constrain his military options, will have a stronger incentive to seek a negotiated end to the conflict rather than escalate it further. Two sources close to Gulf government circles told Reuters on Wednesday that a full-scale assault on Iran now looked less likely. That assessment should be treated with caution: it rests on unnamed sources, and no official shift in US policy has been announced.
Analysts say the market is now pricing in a greater chance that the war ends. June Goh, a senior oil analyst at Sparta Commodities, said markets were assessing what the midterm results mean for Mr Trump’s next steps on Iran, while warning that the path to full diplomacy remained uncertain and that global strategic reserves had been drawn very thin.
There are signs the physical market is already loosening. Crude shipments through the Strait of Hormuz, the waterway through which most Gulf oil passes, have recovered to close to pre-war levels, albeit at higher cost. JPMorgan said in a note on Wednesday that the global oil market had swung back into surplus after months of disruption, estimating a surplus of 1.1 million barrels a day in September widening to 1.4 million barrels a day in October, close to last year’s average.
Yet several analysts caution that the sell-off may prove short-lived. Mukesh Sahdev, chief executive of energy consultancy XAnalysts, noted that the incoming Congress will not take office until January, so US policy options have not immediately changed, and that commercial oil inventories in major consuming countries are near their lowest in 15 years. Iran, he added, could emerge from the election outcome with greater resolve rather than less.
US government data released on Wednesday underlined that tightness: crude, petrol and distillate inventories all fell last week even as demand hit its highest level in a year, according to the Energy Information Administration. For now, however, the market’s verdict is clear — the midterm result has taken a large part of the war premium out of the oil price, and traders are watching for any sign from Washington that diplomacy, rather than escalation, comes next.
Sources: Reuters, “Oil falls for a fourth day on expectations for lower risk of Iran war escalation” (5 November 2026), https://www.reuters.com/business/energy/oil-falls-fourth-day-expectations-lower-risk-iran-war-escalation-2026-11-05/
