WTI tumbles 9% as hopes of an end to Iran war grow following US election results

WTI drops below $90, with traders assessing what the US midterm elections could mean for the Iran war.
Political pressure to end the war with Iran could intensify following the Democrats’ win in the US midterm elections.
Oil prices continue their steep slide despite an unexpected drawdown in US crude inventories.

A sharp sell-off sends West Texas Intermediate (WTI) down 9% on Wednesday, with the US crude benchmark trading near $87 a barrel at the time of writing, its lowest in four weeks. While the immediate catalyst remains unclear, the decline could reflect the Democrats’ victory in the US midterm elections and the pressure it could place on President Donald Trump to end the war with Iran.

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With Democratic majorities in both the House and Senate, lawmakers could have greater room to curb funding for the war with Iran. Some Republicans have joined the initiative, according to Senate Democratic Leader Chuck Schumer, who said, “We will end the war,”

Having earlier indicated that attacks could restart after the elections, Trump has since said the US has no immediate plans to strike Iran, downplaying the likelihood of imminent military action.

Consultations with advisers on replacing Defense Secretary Pete Hegseth are under way, CBS News reported, although Trump has yet to make a decision. According to White House spokeswoman Anna Kelly, Trump “has full confidence in Secretary Hegseth.”

Diplomatic efforts are continuing, but the outlook for negotiations remains uncertain. For discussions on a possible US-Iran agreement, Qatari mediators visited Tehran on Monday evening to meet Iranian Foreign Minister Abbas Araghchi, Reuters reported.

US crude oil stocks recorded a drawdown of 865K barrels last week, rather than the expected 900K-barrel build, according to the Energy Information Administration (EIA). This followed a decline of 1.462 million barrels in the preceding week.

WTI Oil: Key Questions Answered

What defines WTI oil?

Among the crude oils traded internationally, WTI, short for West Texas Intermediate, is one of three major varieties alongside Brent and Dubai Crude. Its relatively low gravity earns it the description “light”, while its low sulphur content accounts for the term “sweet”. These characteristics make it a high-quality oil that is readily refined. Produced in the United States, WTI is distributed through the Cushing hub, known as “The Pipeline Crossroads of the World”. WTI serves as an oil-market benchmark, with its price regularly cited by the media.

What determines WTI oil prices?

Supply and demand underpin WTI oil prices, as they do those of other assets. Stronger global economic growth can boost demand, whereas weaker growth can have the reverse effect. On the supply side, political instability, wars and sanctions can cause disruptions that affect prices. Decisions by OPEC, a grouping of major oil-producing countries, are another important influence. WTI crude prices also respond to the value of the US Dollar: because oil is traded mainly in US Dollars, a weaker dollar can improve affordability, while a stronger dollar can have the opposite effect.

How do inventory figures affect WTI oil prices?

WTI oil prices respond to the weekly inventory releases from the American Petroleum Institute (API) and the Energy Information Agency (EIA), as stock movements signal shifts in supply and demand. A drawdown can point to stronger demand and lift prices, while rising inventories can suggest greater supply and weigh on prices. The API releases its report each Tuesday, followed by the EIA the next day. The two sets of figures are generally close, coming within 1% of one another 75% of the time. As the EIA is a government agency, its figures are regarded as more reliable.

How can OPEC decisions move WTI oil prices?

At meetings held twice a year, the 12 oil-producing nations of OPEC (Organization of the Petroleum Exporting Countries) jointly set production quotas for member countries. These decisions frequently influence WTI oil prices: lower quotas can constrain supply and lift prices, whereas increased production has the reverse effect. The broader OPEC+ grouping brings in ten additional non-OPEC members, with Russia the most notable among them.