Brent oil slides to $94 on Iran uncertainty after US midterms
Oil prices continued to decline on Wednesday, falling to their lowest levels in nearly two months, as the market sought signals on the direction of the US-Iran war after the Democrats resoundingly won in the US midterm elections . Brent, the benchmark for two thirds of the world's oil, slid 8.47 per cent to $94.83 a barrel at 8.58pm UAE time. West Texas Intermediate, the gauge that tracks US…
On Wednesday, oil prices plummeted to their lowest levels in nearly two months, as traders awaited clues about the potential trajectory of the US-Iran conflict following a resounding victory for the Democratic Party in the US midterm elections. Brent crude, which represents roughly two-thirds of global oil, plummeted by 8.47% to $94.83 per barrel, while West Texas Intermediate, a key US benchmark, dipped by 7.5% to $88.88 per barrel. Both benchmarks have dropped more than 15% this week.
The US recently concluded its midterm elections, in which the Democratic Party gained control of both the House of Representatives and the Senate. This electoral shift has cast further uncertainty on President Donald Trump's agenda, particularly with regards to the Iran conflict. The results have been interpreted by many as a reflection of American voters' frustration over high inflation and skyrocketing gas prices, both of which have been exacerbated by the ongoing war.
According to Aliasgar Tambawala, co-chief investment officer at Dubai-based financial services firm Klay Group, oil prices could stabilize if there is a sustained reduction in US military engagement in Iran. "Sustained progress towards de-escalation and improved security around the Strait of Hormuz would reinforce this relief," Tambawala stated.
He added that such developments could potentially diminish the necessity for further interest rate hikes by the Federal Reserve, which recently opted to maintain rates after raising them in September in an attempt to curb rising inflation.
The drop in crude prices occurred even though Washington confirmed limited strikes against Iran's Qeshm island on Monday, while Tehran alleged it had intercepted drones in the region. Negotiations between Washington and Tehran have resumed, involving mediators such as Qatar and Pakistan, yet there have been no clear indications of forthcoming actions.
Iranian Supreme Leader Ayatollah Mojtaba Khamenei reportedly dismissed expectations of a policy shift in the wake of the midterm elections, labeling those who foresee such a change as "gravely mistaken." Meanwhile, Iran's Foreign Ministry spokesman, Esmaeil Baghaei, cautioned Washington against further military action, asserting that the United States would not be deterred by threats or aggression.
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