Oil dips 9%, Wall Street rallies as Democrats sweep midterms

HOUSTON/ BENGALURU:

Oil prices fell 9% on Wednesday in volatile trading as investors awaited Washington's next move in the US-Israeli war with Iran after President Donald Trump's Republican Party lost control of Congress in midterm elections.

Brent futures dropped $9.27, or 8.9%, to $94.29 a barrel, touching the lowest level since September 4, at 1658 GMT. US WTI crude futures were down $7.44, or 7.8%, to $88.54.

US stocks climbed broadly on Wednesday as Democrats' sweeping midterm election victory eased political uncertainty and boosted risk appetite, though data centre shares slipped on fears of tighter AI regulation.

The prospect of fewer sweeping legislative changes lifted some large technology stocks, but companies tied to the AI infrastructure buildout fell.

The dollar weakened against most currencies and yields on long-dated Treasuries moved lower.

Trump acknowledged that the US-Israeli war on Iran played a role in his party's defeat in the elections. Iran's Supreme Leader Ayatollah Mojtaba Khamenei said in a written statement that US hostility would persist regardless of which party was in power. Defence stocks Northrop Grumman, RTX and Lockheed Martin fell sharply, as Trump's $1.5 trillion budget request could now face a tougher road in Congress. "The elections are giving bears a reason to cast doubt on a continuation in Iran… I'm more concerned that we can see an escalation in Iran sooner than a resolution," said Carl Larry, who leads the trading and North America risk team at Enverus.