Crude oil prices fall below $90 a barrel as Vance blames GOP election defeat on Iran war

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Crude oil prices tumbled Wednesday after Vice President JD Vance blamed the war against Iran for Republican midterm election reversals.

U.S. West Texas Intermediate lost 8.3% to close at $88.12 a barrel. Brent crude futures, the international benchmark, shed 8.7% to settle at $94.62.

"The reason we lost is the war," Vance said in a social media post Wednesday. "The president himself said so last night."

Democrats swept the House and Senate in Tuesday's elections, giving the party leverage to pressure President Donald Trump to end the unpopular war that has spiked gasoline and diesel prices.

"The elections are leading the market to conclude that Trump might now be inclined to make a deal," said Andy Lipow, president of Lipow Oil Associates.

The Democrats may try to restrict funding for the war, Lipow said. Trump's announcement earlier this week that the U.S. will cut some funding to Israel could force Jerusalem to accept Washington's decisions, he said.

Trump told the Financial Times on Tuesday that he has no immediate plans to strike Iran. The oil market had priced in the risk of a major escalation after the elections, gaining more than 10% in October.

Escalation risk still real

Oil futures have fallen more than 14% this week as senior U.S. and Iranian officials indicated they're open to a diplomatic settlement of the conflict, which has disrupted global energy supplies for eight months.

The sell-off "could be getting a bit overdone," said Rebecca Babin, senior energy trader at CIBC. The market is in a "shoot first, ask questions" later mode as emotions run high after the unexpected election results, Babin said.

Many observers expected a Democrat tsunami could push Trump to escalate with Iran, Babin said. "Vance's commentary and the public lack of backing from key allies have challenged that assumption," she said.

But the odds still favor military escalation in the region, warned Bob McNally, president of Rapidan Energy and a former advisor to President George W. Bush.

"Iran is hardened in its uncompromising position," McNally said. "Trump, having now paid a huge price for his determination to prevent Iran from obtaining a nuclear weapon, is unlikely to let go of this legacy goal and walk away."