Oil prices rebounded on Thursday, November 5, following a dramatic selloff in the previous session, as investors assessed how the US midterm election results could influence the ongoing war with Iran.
Brent crude climbed back above $97 per barrel after suffering its sharpest daily decline in months. Meanwhile, uncertainty surrounding Washington’s next steps in the Middle East continued to drive volatility across global energy markets.
The recovery followed a sweeping Democratic victory in the US congressional elections, which raised expectations that President Donald Trump could face greater political pressure to pursue a diplomatic resolution to the conflict.
Oil Prices Recover After Sharp 8% Selloff
Global crude oil benchmarks moved higher on Thursday, recovering part of the substantial losses recorded during Wednesday’s trading session.
At approximately 9:38 a.m. Eastern Time, Brent crude futures advanced 2.8% to $97.20 per barrel.
Meanwhile, US West Texas Intermediate (WTI) crude futures rose 1.7% to $89.69 per barrel.
The rebound came after both benchmarks experienced severe declines during the previous session.
Brent crude settled Wednesday at $94.62 per barrel, losing $8.98, or 8.7%. WTI crude dropped $7.97, equivalent to 8.3%, closing at $88.12 per barrel.
Both contracts reached their lowest closing levels since August 31, highlighting the scale of the recent reversal in energy market sentiment.
Despite Thursday’s recovery, oil prices remained under pressure as traders reassessed the geopolitical risks that had supported higher crude valuations in recent months.
US Midterm Elections Reshape Iran War Expectations
The sharp decline in oil prices followed significant political developments in the United States.
Democrats secured control of both the House of Representatives and the Senate in the midterm elections, weakening President Donald Trump’s position in Congress.
The election outcome prompted investors to reconsider the potential duration of the US-Israeli conflict with Iran.
A Democratic-controlled Congress could increase scrutiny of military spending and place additional political pressure on the administration to pursue diplomatic negotiations.
Market participants believe the change in congressional leadership could reduce the likelihood of further military escalation.
However, a political shift in Washington does not guarantee an immediate resolution to the conflict.
President Trump acknowledged that the war had contributed to Republican electoral losses, while Vice President JD Vance also raised concerns about its political and economic consequences.
These developments strengthened market expectations that the administration could face growing pressure to reconsider its approach toward Iran.
Strait of Hormuz Remains Critical for Global Oil Supply
The Strait of Hormuz continues to play a central role in determining the direction of global oil prices.
The narrow maritime passage connects the Persian Gulf with international shipping routes and serves as a major transportation corridor for crude oil and other energy products.
Military tensions involving Iran have created concerns about possible disruptions to shipping operations throughout the region.
These risks previously encouraged traders to incorporate a significant geopolitical premium into crude oil prices.
However, expectations of a potential diplomatic breakthrough have reduced some of those concerns.
If tensions ease, commercial shipping activity through the Strait of Hormuz could become more predictable, supporting energy exports from major Middle Eastern producers.
Improved transportation conditions could also reduce shipping insurance expenses and other costs associated with operating in high-risk waters.
Nevertheless, the situation remains uncertain, and renewed hostilities could quickly disrupt oil shipments and push prices higher.
Trump Signals Caution Over Additional Iran Strikes
President Trump has indicated that the United States does not currently intend to launch additional military strikes against Iran.
His comments have contributed to speculation that Washington may be considering alternatives to further escalation.
However, military activity has not completely stopped.
Earlier in the week, US forces conducted limited strikes against targets on Iran’s Qeshm Island, describing the operations as defensive measures.
The developments underscore the fragile security situation in the Persian Gulf.
Although investors increasingly anticipate diplomatic initiatives, the possibility of renewed military confrontation remains an important risk for energy markets.
Any significant escalation could threaten regional oil infrastructure, disrupt shipping routes, and reverse the recent decline in crude prices.
Consequently, traders remain sensitive to political announcements and military developments involving Washington and Tehran.
ING Analysts Warn Oil Selloff May Be Excessive
Analysts at ING believe that crude oil prices could continue losing some of the geopolitical risk premium accumulated during the conflict if military tensions ease.
The bank noted that energy shipments from the Persian Gulf have demonstrated resilience despite persistent uncertainty.
Continued oil exports could help reduce concerns about major supply shortages and place additional downward pressure on prices.
However, ING also cautioned that the speed and magnitude of the recent market decline may have been excessive.
The uncertain direction of the conflict makes it difficult to determine whether oil prices have already adjusted sufficiently to changing geopolitical expectations.
A prolonged period without additional escalation could encourage further selling.
Conversely, unexpected military developments or renewed threats to regional shipping could trigger another sharp rally.
What Comes Next for Oil Prices?
The near-term outlook for oil prices remains closely connected to developments in the Middle East and the changing political environment in Washington.
Investors will monitor whether the Democratic victory in Congress leads to increased pressure for negotiations with Iran.
Any meaningful progress toward a diplomatic settlement could reduce the geopolitical premium embedded in crude oil prices.
However, the absence of a clear agreement means the possibility of further escalation cannot be dismissed.
Oil traders will also closely follow shipping activity through the Strait of Hormuz, regional production levels, and signs of disruption to energy exports.
For now, Thursday’s rebound suggests that some investors consider the previous session’s selloff too aggressive.
Nevertheless, the combination of political uncertainty, military tensions, and changing supply expectations could keep crude oil markets volatile in the coming sessions.
