Oil prices stabilized in Asian trading on Thursday after a sharp decline the previous day, as investors assessed the potential impact of the U.S. midterm elections on the conflict with Iran. The Democrats' victory in both the House and Senate has raised hopes for a possible de-escalation, which could ease supply disruptions in the Strait of Hormuz. As of 19:34 ET, January Brent crude futures dipped 0.2% to $87.97 per barrel, while U.S. West Texas Intermediate (WTI) crude settled at $88.12 on Wednesday after an 8.3% drop.
The election outcome has weakened President Donald Trump's political position, increasing pressure to seek a negotiated settlement with Iran. Trump acknowledged the war's role in his party's electoral defeat, and Vice President JD Vance questioned its economic costs. Investors see the Democratic-controlled Congress as more likely to push for a diplomatic resolution, potentially allowing more oil to flow through the critical Strait of Hormuz.
However, the path to peace remains uncertain. Qatar has been mediating between Washington and Tehran, but a senior Iranian official told Reuters that the two sides are still far from an agreement. Trump has ruled out immediate further strikes against Iran, though limited strikes occurred earlier this week. The possibility of prolonged conflict or renewed military action continues to influence oil prices.
Meanwhile, U.S. Energy Information Administration data showed a decline in crude inventories by 865,000 barrels in the week ended October 30, less than expected. Gasoline inventories also fell, while distillate stockpiles dropped significantly by 3.565 million barrels.