Brent falls below $100 after the US elections

On Wednesday, oil markets recorded a sharp decline after the Democratic victory in the mid-term elections in the United States and in the face of prospects of de-escalation in the Middle East. The fall in prices brought the barrel of Brent below the symbolic bar of 100 dollars, against a backdrop of renewed optimism regarding diplomatic exchanges between Washington and Tehran. In recent weeks, the regional geopolitical context had raised concerns about an escalation.

On Wednesday, a barrel of Brent from the North Sea, for delivery in January, fell 8.67% to settle at 94.62 dollars, its lowest level since the end of August. For its part, a barrel of West Texas Intermediate, its American equivalent, for delivery in December, fell by 8.29%, to $88.12. Since Friday's close, Brent has fallen almost 20%.

Markets seem to be interpreting the election results as a sign that Donald Trump may now be more willing to find a compromise with Iran, Andy Lipow, president of Lipow Oil Associates, told AFP. The US president acknowledged on Wednesday that the war with Iran had largely contributed to his party's debacle in the midterm elections, after Vice President JD Vance called on Republicans to be "honest" about the political cost of the unpopular conflict.

Once the new Congress is installed in January, "the Democratic majority in the House of Representatives and the Senate could seek to limit funding allocated to the war", adds Andy Lipow, which "could force Donald Trump" to end the conflict. The leader of the Democrats in the Senate, Chuck Schumer, already declared on Wednesday that the war in Iran must “stop”.

With "credible negotiations and prospects for safer maritime transport in the Strait of Hormuz, oil prices could fall sustainably", estimates Ipek Ozkardeskaya of Swissquote. Donald Trump tried on Tuesday to temper speculation about a resumption of bombing. “It seems we are getting everything we want,” he told the Financial Times, in an apparent allusion to talks with the Iranians. But at this stage, “neither Washington nor Tehran have changed their position in the negotiations,” recalls Andy Lipow. “If missiles were to be fired tonight, the scenario could therefore be completely reversed tomorrow.”

Domino effect on energy markets

In recent days, the price of European gas has also fallen sharply. The market's benchmark contract, the Dutch TTF futures, was trading at around 86 euros per megawatt hour, compared to a peak of 104.35 euros on Friday. Prospects for detente in the Middle East have supported this development. On Monday, the German government also reassured the market by ensuring that the country's gas supply remained secure for the coming winter, despite stocks well below regulatory targets.

Machine-translated from French