Oil Prices Slide Weekly Amidst Trump Election Fallout and Iran Tensions

Oil prices experienced a rise on Friday, yet they are poised for a significant weekly decline. This downturn is attributed to the prevailing uncertainty surrounding the Iran war, exacerbated by the substantial losses incurred by US President Donald Trump's Republican Party in the recent midterm elections. Concerns over Middle Eastern supply continue to provide some support to oil prices as the regional conflict persists. Brent crude, the global benchmark for two-thirds of the world's oil, saw a 1.68 per cent increase, reaching $99.94 a barrel by 9:03 AM UAE time. West Texas Intermediate (WTI), the US crude gauge, traded 1.33 per cent higher at $91.72 a barrel. Brent is on track to finish the week down approximately 12 per cent, while WTI is set for a weekly loss of about 12.1 per cent.

The sharp fall in oil prices earlier in the week followed the US midterm elections, where Republicans faced significant defeats, leading to Democrats gaining control of both the House of Representatives and the Senate. This outcome is widely interpreted as a rejection of Mr. Trump's policies, particularly concerning the war with Iran, a sentiment echoed by US Vice President JD Vance on social media. Vance stated, "The reason we lost is the war. The President himself said so last night. But everyone knows why we lost. And any honest conversation about where we go from here must start there." Both benchmarks plummeted by over 8 per cent on Wednesday after the election results, settling at their lowest levels since August 31. Brent closed 8.7 per cent lower at $94.62 a barrel, and WTI fell 8.3 per cent to $88.12.

Prices recovered some ground on Thursday and traded higher in early Friday sessions, influenced by the ongoing uncertainty surrounding the Iran war. President Trump indicated that a decision on whether to resume attacks on Iran or pursue an agreement would be made soon, following consultations with his national security advisors. "Now we will make a decision," he informed reporters on Thursday. "I would rather not destroy the rest of the country if possible, but maybe I will have to. You’ll know soon enough."

Oil prices have exhibited volatility since the conflict's commencement in late February. Brent futures briefly surpassed $126 a barrel in late April before declining amidst negotiations to end the crisis. Disruptions to shipping in the Strait of Hormuz, a critical chokepoint for crude supply, have also bolstered prices, as tankers face attacks originating from Iran. Tehran reported on Thursday that three additional ships had been struck within the strait. Houthi attacks on Saudi tankers in the Bab Al Mandeb strait, a key passage at the southern end of the Red Sea, have further heightened supply concerns regarding OPEC's largest producer, particularly since the Yemeni militia declared a blockade on Saudi shipping in July. Saudi Arabia also temporarily shut its East-West crude pipeline, a vital alternative route to the Strait of Hormuz, from September 11 to 22, following drone attacks that Riyadh attributed to Iraq. The Houthis later claimed responsibility for further attacks on pumping stations along the pipeline in late October.