The Commodities Feed: Oil plunges following US midterm elections

Energy – Middle East optimism grows following US election Oil markets sold off aggressively yesterday, with ICE Brent settling 8.7% lower on the day and below $95/bbl. Selling pressure has only continued in early morning trading today. The outcome of the US midterm elections, with the Democrats winning both the House and Senate has increased hopes that we could see a quicker end to the war in Iran. Given the Democrats’ control Congress, there will likely be more scrutiny over the war, while funding it could become more difficult. The outcome of the elections means there could be more pushback from the Republican Party, too. Yet the new senators and members of the House start in January, leaving room for President Trump to escalate if he wants. Trump has suggested there are no imminent plans to strike Iran.

How all this plays out is still highly uncertain. Therefore, the degree and speed to which the oil market has sold off seems to be overdone. One would think Trump might want to come away with some accomplishments from this war. Does he go about that through renewed strikes or striking a deal? Or by continuing to put pressure on Iran with the ongoing maritime blockade? In the lead up to the midterms, all signals pointed towards Trump resuming strikes. This is less clear now.

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