Oil prices plunge on US-Iran detente hopes ahead of US midterms
A person refuels their vehicles at a Mobil gas station in Los Angeles, on Oct 30, 2026. (Photo: AFP/David Swanson)
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NEW YORK: Oil prices tumbled more than seven per cent on Monday (Nov 2), the eve of crucial midterm elections in the United States, as signals that Tehran and Washington were renewing dialogue boosted hopes of ending the Middle East war.
Iran on Monday said “intensive” exchanges were underway with Washington and offered to reopen the Strait of Hormuz under strict conditions, as efforts escalated to avert a return to conflict.
Earlier, the Axios news outlet reported that US Vice President JD Vance had sent a letter to Iranian national security chief Mohsen Rezaei about possible new talks.
That was the highest-level move from President Donald Trump’s administration in months.
Again Capital’s John Kilduff described investors as experiencing “a violent change in market sentiment,” adding that “we went from really, I think, expecting a major offensive after tomorrow’s US elections to a potential breakthrough,” he told AFP.
“All these losses will be taken right back if this doesn’t pan out,” Kilduff said.
The steep drop in oil prices translated into weakness among petroleum stocks. But Wall Street shares otherwise began the day with promise, bouncing back after last Friday’s rout precipitated by worries over the tech industry’s massive artificial intelligence spending.
But tech shares came under pressure as the session progressed, with the tech-focused Nasdaq slumping 1.1 per cent.
“This is still a market that is on edge,” said Joseph Zidle, chief market strategist at Cresset Capital, who described unease about midterm elections as adding to worries about the AI boom.
“The two of them are actually related,” Zidle said of midterms and AI, noting that opposition to data centres has animated many campaigns.
AI has been “on the ballot in so many places, both blue and red,” Zidle said. “It seems like data centres are part of the kitchen table issues.”
Pollsters expect Democrats to win back control of the House of Representatives, but view Trump’s Republican party as potentially able to maintain a majority in the Senate.
The loss of total Republican dominance would push the president into unfamiliar and uncomfortable territory: a lame duck period beset with high inflation at home, the sputtering war against Iran and hostile Democratic investigations into his activities in Washington.
“Investors are bracing for a fresh round of turbulence ahead of US midterm election fireworks while they assess the extent that companies are burning through cash to keep the AI bonfires burning,” said Susannah Streeter, chief investment strategist at Wealth Club.
Earnings this week will come from Apple, which reports after the close of trading on Monday, as well as Advanced Micro Devices and software titan Palantir will be closely watched this week. Shares in Apple fell 1.8 per cent.
Source: AFP/fs
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