Oil incurred yet more losses on Wednesday, this time by a massive 9 percent after Democrats swept the U.S. House and Senate in Tuesday’s midterm elections, presumably giving them leverage to end the war against Iran that spiked gasoline and diesel prices.
As of mid-session, both Brent and West Texas Intermediate were down over 9 percent, the former sinking to $93.91 and the latter hovering at $87.59 per barrel.
Andy Lipow, president of Lipow Oil Associates, said, “The elections are leading the market to conclude that Trump might now be inclined to make a deal,” and he added that the Democrats may try to restrict funding for the war.
Other analysts echoed Lipow’s sentiments; but overlooked was the fact that the Dems don’t get sworn in until early January, and U.S. president Donald Trump stated (again) just prior to the midterms that the war would either end by force or by a peace agreement “very soon.”
Bob McNally, president of Rapidan Energy, warned that military escalation against Iran is still likely: “Iran is hardened in its uncompromising position,” and “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.”
Iran’s reaction to the midterms virtually guaranteed that hostilities would continue: on Wednesday, its supreme leader Ayatollah Mojtaba Khamenei suggested on an official English language account on X that the Islamic republic would continue to resist the U.S., calling it “The Great Satan”; and parliament speaker Mohammad Bagher Ghalibaf posted: "If the US govt betrays their public will to serve international paymasters and blackmailers, it will learn our NO comes with a Nightmare."
Meanwhile, regarding the high prices at the pump that contributed significantly to the midterm upset, Tom Kloza, chief energy adviser to Gulf Oil, said on social media, “The next six weeks typically deliver one of the most hostile environments for higher gasoline and diesel prices.
“If the US or Iran don’t pursue ‘scorched earth’ policies in the Persian Gulf, we may see considerably lower prices by second half December.”
As for investors’ reaction to the midterms, Rebecca Babin, senior energy trader at CIBC, viewed Wednesday’s sell-off as well as oil shedding more than 14 percent this week overall as “a bit overdone.”
