Oil Plunges 16% as Analysts Warn Iran War Risk Still Burns After Midterms

President Donald Trump says he'll decide soon whether to strike Iran again — and the U.S. military isn't sitting still. A third carrier strike group is already en route to the region, and Trump told reporters in the Oval Office on Thursday that the country is prepared. Rapidan Energy now puts the odds that fighting resumes at 80% as diplomacy sputters.

Markets, meanwhile, are trading like the war is already over. Crude oil prices dropped more than 16% over the last five trading days after Vice President JD Vance publicly pinned the Republicans' midterm drubbing on the conflict — a remark that raised real questions about whether the administration still has the appetite to keep fighting. Brent was trading above $97 a barrel Friday, with U.S. crude around $90.

The Gulf hasn't gotten the memo. Several oil tankers have come under attack near Oman since the election, killing one seafarer, according to maritime security agencies. Yemen's Houthi allies keep lobbing missiles at Saudi Arabia. Helima Croft, RBC Capital Markets' head of global commodity strategy, told investors Friday she was struck by the gap between rising escalation fears in the Gulf and the off-ramp optimism of traders thousands of miles away.

Democrats plan to use their new majorities in both chambers to pass a war powers resolution forcing Trump to end the conflict. But they don't get sworn in until January, and Trump can veto it regardless. Croft said Congress's real weapon is the purse: government funding runs out Dec. 11, and negotiations over another continuing resolution could drag into 2027, handing Democrats leverage just as they take power.

The core dispute hasn't budged. Bob McNally, Rapidan's president and a former energy advisor to President George W. Bush, told CNBC that Trump is determined, almost at any cost, to stop Iran from getting a nuclear weapon — and that Tehran won't give up its capabilities. So long as that standoff holds, he said, the escalation dynamic stays in place — and renewed fighting would send crude back above $100 a barrel, with gasoline, diesel and jet fuel prices surging too, according to former Biden energy advisor Amos Hochstein.

Tehran is talking tough. The social media account of Iran's Supreme Leader Mojtaba Khamenei said the U.S. collapse has accelerated after the midterm results. An unnamed senior Iranian official told Reuters that Tehran sent a nuclear proposal to Washington through Qatar and will only discuss it once the U.S. meets its demands. Trump spoke with Qatar's emir Friday about de-escalation, but publicly brushed the diplomacy aside: Iran, he said, will never have a nuclear weapon.