LONDON: Brent crude prices fell nearly 10% on Wednesday, dropping below $100 a barrel as investors reassessed the risk of further US military escalation against Iran.
The decline followed Tuesday’s US midterm elections, in which Democrats won control of both chambers of Congress. Traders interpreted the result as increasing political pressure on President Donald Trump’s administration to reduce tensions surrounding the US-Israeli war with Iran.
US Vice President JD Vance blamed the conflict and its impact on fuel costs for the Republicans’ election losses. Trump acknowledged the war’s political consequences but maintained that it was “worth it”.
Oil markets responded by reducing the geopolitical risk premium that traders had previously built into crude prices. If the decline continues through the week, oil could record its steepest weekly fall since the pandemic in 2020.
Lower energy prices coincided with falling government bond yields and a broad rally in US equities. The S&P 500 recorded its strongest daily performance in three months on Wednesday.
Read: Iranian Oil: Bessent Says World Can Do Without Exports
However, the gains did not extend across the technology sector. Shares linked to artificial intelligence infrastructure came under pressure as investors considered the prospect of tighter congressional scrutiny.
Chipmakers weakened, while data-centre operator CoreWeave fell again. Meanwhile, sterling strengthened against the US dollar on Wednesday as markets anticipated a Bank of England interest rate increase.
Read: Oil Prices Fall as US-Iran Peace Hopes Ease Supply Fears
On Thursday, the Bank of England raised its benchmark rate by 25 basis points to 4%, its first increase in three years. Its Monetary Policy Committee approved the increase by an 8-1 vote.
The central bank warned that persistent energy costs could sustain inflation pressures despite the recent decline in crude prices.
With input from Reuters
