Oil prices fell on Wednesday after Vice President J.D. Vance blamed the war on Iran for the Republican midterm election upset.
us west texas intermediate It fell 8.3% to close at $88.12 per barrel. brent Crude oil futures, the international benchmark, fell 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 that last night.”
Democrats swept the House and Senate in Tuesday’s elections, giving the party leverage to pressure President Donald Trump to end an unpopular war that has sent gasoline and diesel prices soaring.
“The election has led the market to conclude that President Trump may be willing to strike a deal,” said Andy Lipow, president of Lipow Oil Associates.
Lipow said Democrats could try to limit funding for the war. Trump’s announcement earlier this week that the U.S. would cut some funding to Israel could force Jerusalem to accept the U.S. government’s decision, he said.
President Trump told the Financial Times on Tuesday that he has no immediate plans to attack Iran. Oil markets have priced in the risk of a significant post-election price spike, rising more than 10% in October.
Escalation risk remains real
Oil futures fell more than 14% this week as senior U.S. and Iranian officials signaled openness to a diplomatic solution to the dispute that has disrupted global energy supplies for eight months.
Rebecca Babin, senior energy trader at CIBC, said the selloff “may have gone a little too far.” Babin said the markets were in “shoot first, ask questions later” mode as emotions ran high following the unexpected election results.
According to Babin, many observers predicted that the Democratic tsunami could prompt President Trump to escalate relations with Iran. “Vance’s comments and the lack of public support from key allies cast doubt on that assumption,” she said.
But military escalation in the region remains likely, warned Bob McNally, president of Rapidan Energy and former adviser to President George W. Bush.
“Iran remains firmly committed to its uncompromising position,” McNally said. “President Trump has paid a heavy price for his determination to prevent Iran from acquiring a nuclear weapon, but he is unlikely to abandon this traditional goal and walk away.”
