Oil fell for a third straight session on Wednesday. Brent and US benchmark WTI were both down more than 2% in US trading, after losing over 3% earlier in the day. The midterm results and new comments from President Donald Trump made fresh US strikes on Iran look less likely in the short term.
Brent is hovering just above $100 a barrel. WTI has lost about 9% since Friday, most of it on Monday, when oil dropped sharply after Iran signaled that a deal with the US was possible.
A new Congress
Democrats won control of both the House and the Senate in Tuesday's vote. The new Congress takes office on January 3. That could mean closer scrutiny of the administration's Iran policy from Capitol Hill.
Trump said Iran played some part in the losses. Asked by the Wall Street Journal whether the conflict had hurt Republicans, he said: "Iran was a piece of it." On Fox News he pointed more at fuel costs. Voters backed his approach on Iran, he argued, but did not want to pay more at the pump in the meantime. "It's a short-term problem, but for long-term gain," he said.
Ready, but in no hurry
In a phone interview with the Financial Times on election day, Trump said there were no plans for new strikes right away. "We're locked and loaded if we need to go, but there may be no reason for it," he said. He added: "We seem to be getting everything we want."
That took some heat out of the market. Last week, a report that US strikes on Iran could follow the midterms lifted Brent 2% in a single day. US media also reported that Central Command had plans ready for strikes as soon as Wednesday. By Wednesday morning, no new strikes had been reported.
Qatar pushes the talks along
Qatar, the main go-between, has put new ideas to both sides. An official briefed on the talks told Reuters the mediators expect replies within 36 hours. "The mediators came up with a new suggestion to move the process along, and it's currently being studied by the two sides," the official said.
Majed al-Ansari, spokesperson for Qatar's foreign ministry, said Washington and Tehran both "remain committed to the negotiation process."
Iran is holding its ground for now. Mohsen Rezaei, secretary of Iran's Supreme National Security Council, said on X that "America's response to Iran's rights and demands was not convincing." Tehran has offered to reopen the Strait of Hormuz over two days if the US accepts seven conditions. Lifting oil sanctions and ending the US blockade of Iranian ports are among them.
Supply worries take a back seat
Sellers brushed aside several bullish signals:
- The American Petroleum Institute said US crude stocks dropped about 5.3 million barrels in the week to October 30. Analysts had expected a small build.
- UK Maritime Trade Operations said two projectiles hit the engine room of a tanker off northeast Oman on Tuesday. No one was hurt.
- Iran's Revolutionary Guards claimed on Wednesday that four tankers hit mines south of the strait. Nobody else has confirmed it, and the US military has rejected similar claims before.
Priyanka Sachdeva, an analyst at Phillip Nova, said the mixed signals from Washington, with limited strikes on one side and calm words on the other, make it hard for traders to pick a direction. She also said some profit-taking after October's rally was justified.
Fuel prices followed crude lower. US gasoline futures and heating oil futures, a gauge for diesel, each fell between 2% and 3%.
What to watch
The US Energy Information Administration publishes its weekly stock report at 10:30 a.m. ET today. It will show whether the large API draw holds up. Beyond that, the market is waiting for Iran's answer to the Qatari proposal and any change in US military plans.