Oil Selloff Reflects Hopes for a Political Exit
The Democrats’ decisive U.S. midterm election victory has strengthened expectations that Washington could move toward ending its conflict with Iran, but analysts cited by CNBC say the danger of renewed war remains high. Crude prices fell more than 16% over the last five trading days after Vice President JD Vance publicly attributed Republicans’ election defeat to the war, raising doubts about support within the administration for continuing it.
Democrats intend to use their comfortable majorities in both chambers of Congress to pursue a war powers resolution demanding that President Donald Trump end the conflict. Their new congressional majorities do not take office until January, however. RBC Capital Markets’ head of global commodity strategy, Helima Croft, told investors Friday that financial markets’ optimism about a route out of the war contrasted with worsening escalation concerns in the Gulf.
Regional Attacks and Military Deployments Continue
Developments in the Middle East have offered little evidence of an immediate easing of tensions following the election. Several oil tankers have been attacked near Oman, with one seafarer killed, according to maritime security agencies cited by CNBC. Iran-aligned Houthi forces in Yemen have continued launching missiles at neighboring Saudi Arabia. The U.S. military buildup is also proceeding, with a third carrier strike group heading to the region.
Trump told reporters in the Oval Office on Thursday that he would decide soon whether to attack Iran again. He said he would prefer to avoid further destruction but left open the possibility of additional strikes and emphasized American military readiness. Against that backdrop and stalled diplomacy, consulting firm Rapidan Energy puts the probability of renewed fighting at 80%. That figure represents the firm’s assessment, not a confirmed outcome.
Nuclear Dispute Leaves Energy Markets Exposed
Rapidan President Bob McNally, a former energy adviser to President George W. Bush, told CNBC’s “Squawk Box Asia” on Friday that renewed combat would drive crude back above $100 a barrel. Brent, the international benchmark, was trading above $97 on Friday, while U.S. crude was around $90. His forecast highlights the potential reversal facing an oil market that has recently priced in greater hopes of de-escalation.
McNally said Trump views preventing Iran from acquiring a nuclear weapon and securing the surrender of its nuclear capabilities as a central legacy objective. He characterized Iran’s leadership as unwilling to accept that outcome, leaving the underlying escalation dynamic intact. Separately, former Biden energy adviser Amos Hochstein told CNBC’s “Power Lunch” that war remained a risk, particularly because Trump faces no further elections. Hochstein warned that gasoline, diesel and jet fuel prices would rise sharply if fighting resumed.
Congressional Pressure Faces Timing and Veto Limits
A war powers resolution is unlikely to pass before Democrats assume control of Congress in January, and Trump could veto it even then. Croft identified congressional control over spending as the more consequential source of leverage. Government funding expires on Dec. 11, and she said negotiations over another continuing resolution could extend into 2027, potentially giving Democrats more influence once their majorities are seated.
Croft cautioned that postponing funding decisions would not immediately restrict Trump’s capacity to carry out military operations. It could, however, materially alter the administration’s longer-term funding prospects. The distinction limits how much immediate restraint can be inferred from the election result: Democrats have outlined a legislative challenge to the war, but the timing and effectiveness of that challenge remain uncertain.
Qatar Diplomacy Continues Amid Defiant Messages
Diplomatic contacts remain active despite the military tensions. Trump spoke with Qatar’s emir on Friday about efforts to reduce regional tensions, according to Qatar’s state news agency. Reuters separately reported Thursday, citing an unnamed senior Iranian official, that Tehran had transmitted a nuclear proposal to Washington through Qatar. The official said Iran would discuss the proposal only after the United States satisfied its demands.
Public statements have underscored the obstacles to an agreement. The social media account of Iran’s Supreme Leader Mojtaba Khamenei portrayed the midterm result as accelerating American decline. Trump, meanwhile, appeared dismissive of diplomatic efforts on Thursday, reiterating that Iran would not obtain a nuclear weapon and asserting that its actions required U.S. approval. Whether the Qatari channel can bridge the nuclear disagreement remains unresolved, alongside Trump’s pending decision on further military action.
Source: CNBC