Brent Crater 7% as Democrats' Midterm Sweep Rattles Oil Markets

Crude's slide turned into a rout Wednesday. Brent futures for January 2027 settlements plunged 7.41%, landing at $95.87 a barrel by 11:40 am ET, while West Texas Intermediate for December deliveries dropped 6.02% to $90.22 a barrel, according to Breaking The News. Just hours earlier the losses were a fraction of that, with WTI down 1.19% and Brent off 1.39%.

The trigger: Democrats scored a decisive win in the US midterm elections and grabbed control of Congress. The war with Iran dominated the campaign trail, and Democratic candidates ran on pressing the administration to end the conflict and the energy crisis. Traders read that as a possible off-ramp for the geopolitical risk that has been propping up prices.

Supply data added to the downward pull. The American Petroleum Institute reportedly said US crude inventories shrank by 5.3 million barrels in the week ending October 30, with distillates down 1.2 million barrels. Gasoline stockpiles grew by 1.4 million barrels, and Cushing, Oklahoma, reserves ticked up 511,000 barrels.

On the ground, Energy Secretary Chris Wright told Fox Business that overnight attacks on Iran's Qeshm Island did not disrupt oil supply in the region, and said more refined products would flow from the Persian Gulf and India. Explosions were reported on Qeshm Island, with media reporters claiming the US military struck it in response to an Iranian missile attack on a US aircraft.

The pain is showing up in producers' books. Saudi Arabia's Finance Ministry said third-quarter oil revenues plunged 23% year-over-year to 16.5 billion riyals, about $4.4 billion, dragging total budget revenues down 4% to 259 billion riyals. Non-oil revenues climbed 20% to 142.6 billion riyals.

What comes next hinges on Washington. Global oil shipping has been disrupted since the US-Israeli war against Iran began on February 28 and Iran shut the Strait of Hormuz, and traders are now pricing in whether a Democratic Congress can actually change that.