Oil prices fall below $90 as traders bet on Iran war ending after Democrats sweep midterms

Wall Street's post-midterm party has two no-shows: AI and chip stocks, and oil. Crude is having the far worse time, on track for its worst week since April 2020.

West Texas Intermediate crude ( CL=F ) settled at $88.12 a barrel on Wednesday, down more than 8% on the day and $16 below Friday's close of $104. Its three-day drop of about 15% is its steepest since November 2021.

Brent ( BZ=F ), the global benchmark, is near a two-month low. The sell-off came as traders bet on an end to the Iran war after Democrats swept Tuesday's elections.

"The election results may pressure the president to seek to end the war more quickly," the Wells Fargo Investment Institute wrote Wednesday.

The damage is spreading beyond crude. Gasoline futures ( RB=F ) are on track for their lowest close since March 10, which is good news for anyone driving to Thanksgiving dinner. The Energy Select Sector SPDR Fund ( XLE ) is down more than 5%. Refiners Marathon Petroleum ( MPC ) and Valero ( VLO ) are down about 8% to 10%.

Even after the slide, oil hasn't given back the whole war. WTI started 2026 near $57 and peaked near $113 on April 7, and it's still roughly 50% above where the year began.

The election angle adds some history. Oil hasn't followed a single script after Trump's elections. Crude rose about 10% from Election Day through the end of November after his 2016 win and about 20% after his 2020 loss, and it fell about 6% after his 2024 win.

The closest echo is 2018, Trump's first midterm, when Democrats took the House. Crude fell about 18% from Election Day through the end of that November, by Yahoo Finance calculations.

Supply hasn't caught up with the peace trade. US diesel stockpiles are at their lowest since 2003, and Wells Fargo noted that gasoline and diesel supplies "remain constrained by the war."

That leaves crude priced for a deal that hasn't happened. Nationwide's chief market strategist, Mark Hackett, says oil is retreating "on hopes for a deescalation in the Iran conflict, even as the diplomatic signals remain ambiguous."

Internal AI tools helped analyze interview transcripts, research, and draft this post. Humans reviewed, edited, and fact-checked this post before publication.

Jared Blikre is the global markets and data editor for Yahoo Finance. Follow him on X at @SPYJared or email him at jaredblikre@yahooinc.com .