Crude drops 14% in one week after Vance blames Iran war for GOP loss

Crude oil futures lost more than 14% in value over the course of the week, a steep decline driven by new political signals regarding the war in Iran. The drop culminated on Wednesday when prices fell below the $90 mark per barrel for the first time in months.

U.S. West Texas Intermediate crude closed at $88.12, an 8.3% drop from the previous day. The international benchmark, Brent crude, settled at $94.62 after shedding 8.7%. These figures mark a sharp reversal from earlier in October, when prices had climbed more than 10% as traders priced in the risk of military escalation following the midterm elections.

Vice President JD Vance posted on social media on Wednesday that the war was the reason for the Republican defeat. "The reason we lost is the war," Vance wrote. He noted that President Donald Trump had made a similar point in a speech the previous night. Democrats captured both chambers of Congress on Tuesday, giving them the authority to press for an end to a conflict that has pushed gasoline and diesel prices higher for eight months.

Andy Lipow, president of Lipow Oil Associates, said the election results are leading the market to believe Trump is now inclined to make a deal. He noted that Democrats could move to restrict war funding. Lipow added that Trump's announcement earlier in the week that the U.S. will cut some funding to Israel could force Jerusalem to accept Washington's decisions. Trump told the Financial Times on Tuesday that he has no immediate plans to strike Iran.

Senior U.S. and Iranian officials have signaled they are open to a diplomatic settlement. The conflict has disrupted global energy supplies since it began eight months ago. Rebecca Babin, a senior energy trader at CIBC, cautioned that the sell-off might be overdone. She described a market reacting to the unexpected election outcome while many observers had previously assumed a Democratic sweep would push Trump to escalate.

Bob McNally, president of Rapidan Energy and a former advisor to President George W. Bush, warned that the odds still favor military escalation. "Iran is hardened in its uncompromising position," McNally said. He argued that Trump, having paid a huge price to prevent Iran from obtaining a nuclear weapon, is unlikely to walk away from that legacy goal.

The market reaction follows a week of shifting diplomatic tones. Vance's public attribution of the election loss to the war stands as a distinct break from previous Republican messaging. The decline in crude prices reflects a rapid reassessment of the geopolitical risk premium that traders had applied to energy contracts throughout October.