Oil falls on Iran war uncertainty, US Democrats’ midterm sweep

Oil prices were down more than $3 a barrel on Wednesday in volatile trading as investors awaited Washington’s next move in the US-Israeli war with Iran ‌after President Donald Trump’s Republican Party lost control of Congress in midterm elections. Drops in crude prices  always has a dent on Nigeria finances and foreign exchange build up. Higher crude price is suppose to build the nation’s reserve in excess crude account to cushion when oil prices drop below the budget bench mark.

Brent futures were down $3.20, or 3.09%, to $100.40 a barrel which it is still above the 2026 budget bench mark. US West Texas Intermediate crude futures were down $3.01, or 3.13%, to $93.08. Brent in the previous session settled at its lowest level in nearly four weeks as traders weighed talks to end the wars in Ukraine and Iran.

Trump acknowledged that the Iran war had played a role in his party’s sweeping defeat in the midterm elections, as Democrats won control of the House of Representatives and the Senate. The oil market was moving lower on the expectation that Trump might move on from Iran, but bigger headlines on peace talks were needed to truly settle the market, said Chris Beauchamp, chief market analyst at IG.

“For now that’s lacking, but with concessions being made by Iran, it seems that the mood is shifting towards a more secure deal,” he added. Iran’s Supreme Leader Mojtaba Khamenei said in a written statement that US hostility would persist regardless of which party was in power. Meanwhile Yemen’s Houthis said they had targeted King Khalid International Airport in Riyadh. There was no confirmation from Saudi authorities.

Markets remained on watch for any progress in talks to end the war, as Qatar stepped up mediation efforts to avert an escalation of attacks after the US elections. A senior Iranian official told Reuters ‌on Tuesday that Iran and the United States remain far from a deal to end their war. Trump told the Financial Times on Tuesday that the United States had no immediate plans to strike Iran.

“There is still clearly a risk that Trump-Israel could choose to strike, but the sense of any immediate overhanging risk has left the market,” said Bjarne Schieldrop, chief commodities analyst at SEB. Meanwhile Gulf exports of crude, condensate and refined products, excluding LPG, averaged 17.1 million barrels per day in October, according to ship-tracking data from Vortexa, down from 18.9 million bpd in September but still roughly three-quarters of pre-war levels.

“The continued recovery in crude shipments from the Middle East has begun to weigh on physical cargo prices, potentially helping to accelerate the normalisation of refining margins and, ultimately, lower fuel prices,” said Saxo Bank analyst Ole Hansen.

“However, for consumers to feel the full benefit, refined product exports from Middle Eastern refineries must also recover.” In the US, crude stocks fell by 5.27 million barrels in the week ended October 30, market sources said on Wednesday, citing data from the American Petroleum Institute. Eight analysts polled by Reuters had expected, on average, a rise of about 880,000 barrels in crude inventories.