The selloff was swift. By 0450 GMT, Brent crude futures had dropped $1.37, or 1.3%, to $102.91 a barrel, while U.S. West Texas Intermediate slid $1.09, or 1.2%, to $90.40, according to Reuters — traders pricing out the war premium that had built up the day before on reports the Pentagon was drawing up Iran strike options.
The move followed Trump's Thursday announcement that Washington is having "productive discussions" with Iran — and a flat promise: "we will not be attacking Iran at any time prior to the Midterm Elections to be held in the United States on November 3rd." He made clear the pressure campaign isn't going anywhere, saying the blockade "will remain in full force and effect," with 22 million barrels flowing through the Strait of Hormuz in a single night, "with not one barrel coming from, or going to, Iran." He closed with his signature line: "IRAN WILL NOT HAVE A NUCLEAR WEAPON!"
President Trump tells reporters oil prices will tumble after the midterms. (C-SPAN)
The reversal was dramatic. Just a day earlier, Brent had jumped nearly 4% after reports that the Pentagon was drawing up strike options — including hits on Iranian energy infrastructure — that could be executed before the vote. Trump's announcement killed that rally within hours, with WTI pulling back from an intraday high near $93 and Brent from nearly $106.
The decline has limits, and the market knows it. Nine tankers have come under attack in and around the Strait of Hormuz in the past week, the most since the war began in February, and flows through the strait are running 30% below prewar levels. Hurricane Isaias has shut in about 1.3 million barrels a day — nearly 63% of Gulf of Mexico production — with 121 platforms evacuated ahead of landfall. An emergency release of 100 million barrels from IEA stockpiles is underway to cushion the blow.
Washington is also keeping the economic screws on Tehran. On Thursday the administration sanctioned 17 more vessels and networks moving Iranian crude — the same shadow-fleet crackdown the Treasury has been running for months. Iran's foreign minister said Tehran is reviewing an American response to its proposal to reopen the strait within seven days.
For American drivers, the relief is real but modest so far. AAA puts the national average at $4.41 a gallon, down about 7 cents from last week but still the highest ever for this time of year after a record-setting September. California drivers are paying $6.40 while Texas sits at $3.94. Trump has told voters oil prices will tumble after the midterms — Friday's market move suggests traders are willing to bet on it.