Oil extends slide amid heightened hopes of end to Iran war

Brent oil pushed lower after tumbling more than 8 per cent in the previous session as investors bet that a Democratic sweep in the US midterm elections could accelerate efforts to end the war in the Middle East.

The global benchmark traded near $94 a barrel, while West Texas Intermediate was around $87 after its biggest loss since May on Wednesday. Vice president JD Vance said voter frustration over the war and the US-Israel relationship doomed Republicans in the elections. Senate minority leader Chuck Schumer, a Democrat, pledged to end the conflict, now in its ninth month.

Democrats won control of both chambers of Congress in the midterms, dealing a major setback to US president Donald Trump and his Republican Party. The sweep gives them greater leverage over government spending, potentially constraining the administration’s ability to prosecute the Iran conflict.

Brent rallied to a six-month high in October as Trump threatened renewed strikes on Iran after the midterms. While polls were still open, Trump told the Financial Times that he had no immediate plans to ramp up attacks, and later conceded that it’s “largely true” Republicans lost because of the war.

Despite the conflict, there has been a revival of crude exports from the Persian Gulf, putting pressure on Middle East prices, although shipments of oil products remain constrained. Those disruptions, along with escalating Ukrainian attacks on Russian refineries, have helped drive gasoline and diesel prices higher.

“Larger crude oil exports out of the Middle East along with President Trump stating he has no immediate plans to strike Iran are keeping the pressure on crude oil prices for now,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities. “Democratic control of Congress could also tighten US military spending” and bring an end to the war sooner, he added.

The election outcome and Trump’s restraint on further attacks against Iran reverberated across energy markets on Wednesday. North Sea crude prices slumped to fresh lows, while European natural gas tumbled.

Still, tightness persists in fuel markets. In the US, stockpiles of distillates — a category that includes diesel — dropped below 100 million barrels last week, the lowest level since 2003, according to government data. Nationwide crude inventories fell for a fifth week. - Bloomberg