Oil Plunges 8.7% as Brent Settles at $94.62 on Iran Deal Bets

Updated Nov. 5: Oil recovered part of Wednesday's loss on Thursday morning. January Brent traded near $96.89 a barrel at about 13:43 GMT, up about 2.4% from Wednesday's $94.62 settlement, and December WTI was near $89.47, up about 1.5% from $88.12, according to Yahoo Finance data. These are approximate intraday levels, not settlements.

Oil prices plunged on Wednesday, Nov. 4, as traders bet the U.S. midterm election results could bring a quicker end to the Iran war. January Brent crude, the front-month contract, settled down 8.7% at $94.62 a barrel, according to CNBC and Bloomberg. U.S. West Texas Intermediate (WTI) crude for December delivery fell 8.3% to $88.12.

Brent fell as much as about 10% during the session, sliding to $93.22 at one point, Bloomberg reported via Rigzone. Bloomberg said WTI's drop was its biggest since May. Oil futures have fallen more than 14% this week, CNBC said.

Oil prices today: Brent and WTI settlements

Contract	Tue., Nov. 3 settle	Wed., Nov. 4 settle	Change
Brent crude (January)	$103.60	$94.62	-$8.98 (-8.7%)
WTI crude (December)	$96.09	$88.12	-$7.97 (-8.3%)

Sources: Wednesday's settlements from CNBC and Bloomberg via Rigzone. Tuesday's settlements match Yahoo Finance daily data for the BZF27.NYM and CLZ26.NYM contracts. The dollar changes are our calculation.

Why did oil prices fall today?

Traders read the election as raising the odds of a U.S.-Iran deal. CNBC said Democrats were projected to win both the House and the Senate on Tuesday, giving them leverage to press President Donald Trump to end the war, which has pushed up gasoline and diesel prices.

"The elections are leading the market to conclude that Trump might now be inclined to make a deal," Andy Lipow, president of Lipow Oil Associates, told CNBC. Lipow said Democrats may try to restrict war funding. Vice President JD Vance wrote in a social media post that "the reason we lost is the war," CNBC reported.

Trump told the Financial Times on Tuesday that he had no immediate plans to ramp up fighting in the Middle East, Bloomberg and CNBC reported. "With this election result and Iran's economic situation, it does seem like a deal is more likely than not," Ajay Parmar, director of energy at ICIS, told Bloomberg.

Selling by trend-following funds added to the drop. Bloomberg said commodity trading advisers cut their Brent long positions to about 55% from 73%. Physical crude prices have also weakened, with flows through the Strait of Hormuz near pre-war levels, according to Bloomberg.

Is the oil sell-off overdone?

Some analysts think it may be. Rebecca Babin, senior energy trader at CIBC, told CNBC the sell-off "could be getting a bit overdone" and that the market is in a "shoot first, ask questions" later mode. Bob McNally, president of Rapidan Energy, told CNBC that "Iran is hardened in its uncompromising position."

Oil had gained more than 10% in October on fears of escalation after the election, CNBC said. Bloomberg noted that U.S. diesel stockpiles are below 100 million barrels for the first time since 2003, a sign that fuel markets remain tight.

The drop extends Monday's slide, when January Brent fell 7.6% on Iran peace-talk hopes; read our story on oil's plunge as Iran talks eclipsed the OPEC+ December hold. For the stock market's reaction to the midterm results, see our report on Dow futures jumping after Democrats were projected to win Congress. U.S. gas prices are covered in our guide to natural gas prices today at Henry Hub.

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