Oil prices plunge on US-Iran detente hopes ahead of US midterms

Oil prices plummeted more than seven percent on Monday, the day before the United States' important midterm elections, as news of a potential thawing in relations between Iran and the US fueled hopes for an end to the ongoing Middle Eastern conflict. Iran announced ongoing high-level talks with Washington and proposed reopening the Strait of Hormuz under specific conditions, as efforts intensified to prevent a relapse into war.

Earlier, Axios reported that US Vice President Kamala Harris had sent a letter to Iran's national security chief, Mohsen Rezaei, proposing new negotiations. This was the highest-level communication from President Donald Trump's administration in months. John Kilduff, a partner at Again Capital, noted that investors experienced a "violent change in market sentiment," saying, "We went from really, I think, expecting a major offensive after tomorrow's US elections to a potential breakthrough," according to AFP.

The significant drop in oil prices also led to weakness among petroleum stocks, but Wall Street shares started the day on a positive note, rebounding after last week's decline driven by concerns over the tech sector's substantial investment in artificial intelligence. However, tech shares faced pressure as the day progressed, with the tech-heavy Nasdaq falling by 1.1 percent.

This uncertainty is still present, according to Joseph Zidle, Cresset Capital's chief market strategist, who linked the midterm elections and AI boom, citing opposition to data centers as a major issue in many campaigns.

Polls suggest Democrats are likely to regain control of the House of Representatives, but there is uncertainty about whether President Trump's Republican party will maintain a majority in the Senate. A loss of total Republican dominance would place Trump in an unfamiliar situation: a lame duck period marked by high inflation at home, the ongoing conflict with Iran, and hostile Democratic investigations into his activities in Washington.

Investors are preparing for further volatility ahead of the US midterm elections, while also evaluating how companies are spending resources on maintaining the AI boom.

Companies such as Apple, which reports earnings after the close of trading on Monday, Advanced Micro Devices, and software giant Palantir will be among those closely watched this week. Apple's shares dropped by 1.8 percent. To stay informed, readers are encouraged to upgrade to a supported browser or download the mobile app for the latest updates on breaking news and top stories.