Brent oil slides to $94 on Iran uncertainty after US midterms

Oil prices plummeted on Wednesday, reaching their lowest levels in nearly two months, as market participants awaited indications of the trajectory of the US-Iran conflict following the Democrats' decisive victory in the US midterm elections. Brent, the benchmark for two-thirds of the world's oil, plummeted 8.47% to $94.83 a barrel at 8:58 pm UAE time.

West Texas Intermediate, the gauge tracking US crude, slipped 7.5% to $88.88 per barrel. Both have now declined more than 15% this week. The US conducted its midterm elections in which the Democratic Party claimed control of the House of Representatives and the Senate, casting doubt on President Donald Trump's agenda, especially concerning the Iran conflict.

The results were seen as a message from American voters frustrated by high inflation and soaring gas prices due to the war. Oil prices might stabilize if expectations of reduced US military involvement in Iran rise, said Aliasgar Tambawala, co-chief investment officer at Dubai-based financial services firm Klay Group. "Sustained progress towards de-escalation and improved security around the Strait of Hormuz would reinforce this relief," he added.

He further noted that these developments could diminish the necessity for further rate hikes from the Federal Reserve. The US central bank recently decided to maintain interest rates after raising them in September in an attempt to curb rising inflation. The decline in crude prices occurred despite Washington confirming limited strikes on Iran's Qeshm island on Monday.

Tehran, on the other hand, reported intercepting drones in the area. Negotiations between Washington and Tehran have resumed, involving mediators from Qatar and Pakistan, but there have been no clear indications of forthcoming actions. Iran remained pessimistic, with its supreme leader Ayatollah Mojtaba Khamenei reportedly stating that those anticipating a shift in US policy towards his country after the midterm elections were "gravely mistaken."

The Iranian Foreign Ministry spokesman, Esmaeil Baghaei, warned Washington against additional military action, asserting that the country would not be intimidated by threats or aggression.