Gasoline prices are displayed at a filling station in Houston, Texas. [AFP]
Gasoline prices are displayed at a filling station in Houston, Texas. [AFP]

International oil prices tumbled Wednesday (local time) after the Democratic Party's sweeping victory in the US midterm elections raised hopes for an early end to the Iran war.

Brent crude January futures closed down $8.98, or 8.67 percent, at $94.62 a barrel on the New York Mercantile Exchange. West Texas Intermediate futures for December delivery tumbled $7.97, or 8.29 percent, to settle at $88.12 a barrel. Both benchmarks fell to their lowest levels in two months.

The midterm results were widely seen as a sharp rebuke from voters over the unpopular Iran war and high inflation. Vice President JD Vance pointed to the Iran war as a key reason for the Republican Party's midterm defeat, and President Donald Trump also said that day that the conflict had contributed to the electoral drubbing. In an interview with the Financial Times conducted hours before polls closed Wednesday, Trump said he had no immediate plans to attack Iran.

Investors responded by pricing in a greater likelihood of an early end to the war. Senate Majority Leader Chuck Schumer, whose party swept both chambers of Congress, told a news conference that day, "This war must end." Analysts said the Democrats' control of both the Senate and the House would allow them to pressure the Trump administration to wind down the conflict through war-related resolutions and budget oversight.

The prospect of an end to the Iran war fueled expectations that oil flows through the Strait of Hormuz — a critical chokepoint for global crude shipments — could become less restricted, driving prices lower.

Ajay Parmar, a director at energy market analysis firm ICIS, said the election outcome and Iran's economic situation made a deal more likely than not. "President Trump's leverage has weakened considerably," he added.

Claudio Galimberti, senior economist at Rystad Energy, said the Trump administration now had less political room to maneuver while institutional pressure to reach an agreement over the Strait of Hormuz had grown.


kate01@heraldcorp.com