Why oil prices fell below $100 after the US midterms
Brent crude fell more than 8% in one day to its lowest level since August, as traders bet that the US election result makes a de-escalation with Iran more likely. Here is what moved prices and what could move them back.
Brent crude fell 8.7% on Wednesday, November 4, to settle at $94.62 a barrel, its lowest close since August 31.
Oil prices feed into fuel, shipping and food costs worldwide, and traders now see a higher chance that the US-Iran war ends, though most analysts still expect volatility.
Qatari mediators are trying to restart US-Iran talks, while US officials say military plans for possible strikes are ready but have not been ordered.
Global oil prices have had their sharpest fall in months. Brent crude, the international benchmark, dropped 8.7% on Wednesday, November 4, to $94.62 a barrel, its lowest close since August 31. Traders are betting that the result of the US midterm elections makes a de-escalation of the war with Iran more likely.
What happened
Oil had been climbing for weeks because of the US-Israeli war with Iran and disruption to shipping through the Strait of Hormuz, the narrow channel between Iran and Oman that carries a large share of Middle Eastern oil exports. According to Gulf News, Brent peaked near $118 on Friday, October 30.
The decline began on Monday, November 2. An official briefed on talks in Doha told Reuters that a draft proposal to end the war was being circulated for a possible follow-up meeting, OilPrice.com reported. Brent fell more than 4% that day, to about $108.
Brent settled at $103.60 on election day, Tuesday. The sharpest fall came on Wednesday, after Democrats won control of both chambers of Congress. Reuters figures cited by The Sunday Guardian show Brent down 8.7% to $94.62 and US crude, known as West Texas Intermediate or WTI, down 8.3% to $88.12. Brent was down nearly 16% for the week.
Trading on Thursday was choppy. Prices slipped again in Asian trading, with Brent near $93.60. By 09:00 GMT, Reuters reported Brent had recovered to $95.40 and WTI to $88.23.
Why prices fell
The main reason is politics in Washington. Fuel prices and the war itself were major complaints among voters, Reuters reported. After the results, Vice President JD Vance wrote on X: "The reason we lost is the war." President Donald Trump told Fox News that the war's effect on gasoline prices was "largely true" as a cause of the losses, but said he would do it again, according to Gulf News.
Investors read this as pressure on the White House to favour negotiations. Markets are also waiting to see what the new Democratic-controlled Congress, which takes office in January, will do, Reuters noted.
Supply has also improved. Reuters reported that crude shipments through Hormuz have recovered to near pre-war levels, though at a higher cost. The bank JPMorgan estimated that the world produced 1.1 million barrels a day more oil than it used in September, and 1.4 million barrels a day more in October.
What each side is saying
The signals from both governments are mixed. Mr Trump told Fox News on Wednesday that the US might need to "do something large" against Iran, Gulf News reported, citing the BBC. A day earlier he had told the Financial Times he had no immediate plans to order attacks. On Thursday, US officials told Axios the military was finalising preparations for possible major combat, but stressed that this was not an order.
Inside the administration, views differ. According to Axios reporting cited by Gulf News, Mr Vance urged an agreement, while CIA Director John Ratcliffe and Treasury Secretary Scott Bessent favoured keeping the US naval blockade of Iran in place.
Iran's chief negotiator, Mohammad Bagher Ghalibaf, said Americans had voted "NO TO WAR." Supreme Leader Mojtaba Khamenei warned in a written statement that the war would widen if the US resumed attacks. Iran's foreign ministry says the Strait cannot be reopened or secured until the US ends its naval blockade. According to Gulf News, Iran's conditions also include sanctions relief and the release of frozen funds.
Shipping risks remain. Iran's Revolutionary Guards said on Wednesday that four tankers hit naval mines in a passage south of the strait that they had declared off-limits. On Thursday they said two tankers and a tugboat caught fire after using unauthorised routes, Reuters reported. These are Iranian claims and have not been independently confirmed.
Why it matters
Crude oil is priced globally, so a move in Brent eventually reaches petrol stations, airlines, shipping companies and food prices in almost every country. That makes the drop important for oil-importing economies, and for exporters whose revenues depend on the price.
Most analysts quoted by Reuters stress that the fall is a reaction to expectations, not a settled outcome. June Goh of Sparta Commodities said markets are pricing in a higher chance the war ends, but warned of more volatility because "the global strategic reserves have drawn very thin." Mukesh Sahdev of XAnalysts noted that commercial oil stocks in major consuming countries are near their lowest in 15 years, which leaves less of a cushion if supply is disrupted again.
Giovanni Staunovo of UBS said the situation in the Middle East remains unresolved, which explains Thursday's partial recovery. He added that Brent reacts more to geopolitics than WTI, which mainly reflects the US domestic market.
Not everyone expects calm. The bank Citi said that with the elections over, the White House could lean more on the president's own foreign policy powers, which could include escalation against Iran.
What's next
Diplomacy is the first thing to watch. Qatari mediators are seeking US and Iranian backing for a draft deal that reportedly sets out three days of confidence-building steps and could restart direct talks within days, according to Gulf News. No ceasefire or signed agreement has been announced.
Analysts are divided on how likely a deal is. The consultancy Eurasia Group, cited by Reuters, now puts the chance of renewed US strikes on Iran at 60%, a deal at 10% and a continued standoff at 30%. It estimates that an escalation could push Brent back to between $110 and $125 a barrel.
The new Congress takes office in January. Until then, oil prices are likely to react to statements from Washington and Tehran, to reports from tankers in the Strait of Hormuz, and to weekly US government data on fuel stocks and demand.
The next concrete things to watch are whether Qatar's proposal leads to a new round of direct talks, and whether the US orders the strikes its military says are prepared.