Crude oil prices fell Wednesday after Vice President JD Vance blamed the war on Iran for Republican midterm election setbacks.
WE West Texas Intermediate was down nearly 9% at $87.59 a barrel as of 12:36 p.m. ET. Brent Crude futures, the international benchmark, fell more than 9% to $93.91.
“The reason we lost was the war,” Vance said on social media Wednesday. “The president himself said it last night.”
Democrats won the House and Senate in Tuesday’s elections, giving the party leverage to pressure President Donald Trump to end the unpopular war that has driven up gasoline and diesel prices.
“The election is leading the market to conclude that Trump may now be inclined to make a deal,” said Andy Lipow, president of Lipow Oil Associates.
Democrats could try to restrict war funding, Lipow said. Trump’s announcement earlier this week that the United States would cut some funding to Israel could force Jerusalem to accept Washington’s decisions, he said.
Trump told the Financial Times on Tuesday that he had no immediate plans to strike Iran. The oil market had priced in the risk of a major escalation after the elections, gaining more than 10% in October.
The risk of escalation remains real
Oil futures fell more than 14% this week as senior U.S. and Iranian officials signaled they were open to a diplomatic settlement to the conflict, which has disrupted global energy supplies for eight months.
The selling “could get a little overdone,” said Rebecca Babin, senior energy trader at CIBC. The market is in a “shoot first, ask questions” later mindset as emotions run high after the unexpected election results, Babin said.
Many observers expected a Democratic tsunami to push Trump into escalation with Iran, Babin said. “Vance’s comments and lack of public support from key allies have called this assumption into question,” she said.
But the odds remain favorable for military escalation in the region, warned Bob McNally, president of Rapidan Energy and former adviser to President George W. Bush.
“Iran is hardened in its intransigent stance,” McNally said. “Trump, who has now paid a huge price for his determination to prevent Iran from acquiring nuclear weapons, is unlikely to abandon this legacy goal and walk away.”
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