Brent Oil Falls Below $100 for First Time Since October

Photo: AFP via The National

Oil prices fell through $100 a barrel on Wednesday for the first time since early October, then kept sliding, as traders bet that the Democrats' midterm win could open the way to an end to the war with Iran.

Brent crude, the benchmark for two thirds of the world's oil, dropped 4.7 percent to $98.76 a barrel around 1605 GMT, Moneycontrol reports, citing Reuters. The US benchmark, West Texas Intermediate, fell 4.5 percent to $91.73 at the same time.

By late evening the fall had deepened. The National reports Brent down 8.47 percent to $94.83 a barrel, and West Texas Intermediate down 7.5 percent to $88.88. Both benchmarks are now down more than 15 percent this week.

The trigger was politics, not supply. Democrats took both the House and the Senate on Tuesday, and President Donald Trump has since said the United States has no immediate plans for further strikes on Iran, although he added that it is still ready to act if needed.

Dennis Kissler, senior vice president of trading at BOK Financial, told Reuters that larger crude exports out of the Middle East, plus Trump's comment, are keeping pressure on prices for now. He added that Democratic control of Congress could also tighten US military spending in the Middle East and raise the chance of a peace deal sooner rather than later.

That is a sharp turn from where oil has been this year. NDTV Profit notes Brent has surged about 70 percent this year as the war disrupted flows from the Gulf, and diesel and petrol prices have risen with it, including in the United States.

One figure shows how strong the de-escalation bet is. US crude stocks fell by 865,000 barrels last week, the fifth weekly fall in a row, which would normally push prices up. Prices fell anyway, because traders are pricing out the risk of a wider war.

There are still reasons for caution. The National reports that Iran's supreme leader, Ayatollah Mojtaba Khamenei, said those expecting a shift in US policy after the midterms were gravely mistaken, and Iran's foreign ministry warned Washington against further military action. Talks between Washington and Tehran have resumed, with Qatar and Pakistan among the mediators, but there is no clear signal yet on the next move.

For Pakistan, the direction matters at the pump. Petrol is Rs369.06 a litre and diesel Rs391.52 from today, after a second cut in two days, petrol down Rs5.45 and diesel down Rs3.68 today. If Brent stays near $95, there is room for more relief at the next price review, but the pump price does not move one to one with Brent. The rupee, taxes and the levy all feed into the final price, so a lower Brent helps, it does not guarantee a cut.

This is the market side of the same story we covered tonight on Wall Street, where the Dow jumped 1,300 points on the midterm result, and in Washington, where JD Vance blamed the Iran war for costing Republicans Congress. Markets, voters and now the vice president are all pointing the same way, that the war has become too costly to carry on as before.

What this means in plain terms: a barrel of oil that cost well over $100 this week is now near $95, because traders think the war may be winding down. For drivers in Pakistan, that is good news, but only if the fall holds until the next review.

Sources

• The National: Brent oil slides to $94 on Iran uncertainty after US midterms
• Moneycontrol (Reuters): Brent crude drops below $100 for first time since October
• NDTV Profit: Brent crude falls below $100 for first time in two months

The next test is whether Brent holds below $100, or climbs back if the Iran talks stall and the war risk returns.

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