Crude oil prices experienced a sharp decline overnight, dropping over 8% to fall below the $100 per barrel mark. Both Brent Crude and West Texas Intermediate (WTI) saw significant losses, with Brent closing near $95 and WTI falling towards $88. This marked the worst single-day fall in crude oil prices since May.
The plunge was attributed to the Democrats' sweeping victory in the midterm elections, which increased pressure on the GOP to end the war with Iran. Vice President JD Vance noted that voter frustration over the war and US-Israel relations contributed to the Republicans' defeat. Senate Minority Leader Chuck Schumer, a Democrat, pledged to end the war soon.
Adding to the downward pressure, former President Donald Trump told the Financial Times that there were no immediate plans to ramp up attacks on Iran. He also acknowledged that the war had significantly impacted the Republicans' election prospects. Despite increasing attacks on commercial vessels in the Strait of Hormuz, oil product shipments remained constrained, leading to record-high gasoline and diesel prices in the US.
Analysts at BOK Financial Securities suggested that Democrat control of Congress could constrain US military spending and hasten the end of the war. Government data revealed that US stockpiles of distillates, including diesel, fell below the 100 million barrel mark last week, the lowest level since 2003. Crude inventories also declined for the fifth consecutive week.