LONDON — Global markets delivered a dramatic split verdict on Thursday, 5 November 2026, as oil plunged below $100 a barrel while shares, gold and most major currencies rallied after Democrats swept the US midterm elections. Brent crude fell 97 cents, or 1.03 percent, to $93.65 a barrel as of 0211 GMT, while US West Texas Intermediate dropped $1.14, or 1.29 percent, to $86.98, according to Reuters.
Both benchmarks had tumbled more than 8 percent in the previous session to their lowest since 31 August, and Brent is about 20 percent lower this week, heading for its biggest weekly drop since the pandemic shock of April 2020. Yet the S&P 500 closed 1.6 percent higher on Wednesday, European shares neared a two-month high, and gold hit its highest in more than two weeks. Investors are pricing in a lower chance of renewed US-Israeli strikes on Iran and a greater chance that the war which began at the end of February 2026 ends through negotiation.
Illustration: An oil pumpjack beside a falling red price chart as crude oil prices plunge below $100 a barrel.
What Happened
Democrats won sizable majorities in the Senate and the House in the midterms held on 3 November. Two sources close to Gulf government circles told Reuters that a weakened President Donald Trump now has a greater incentive to seek a deal, and that a full-scale assault on Iran now looks less likely. June Goh, senior oil analyst at Sparta Commodities, said markets are pricing in a greater likelihood that the war ends, but warned there is "more volatility ahead" and the "path to full diplomacy... still wrought with many unknowns."
Fundamentals reinforced the sell-off. JPMorgan said the global oil market is back in surplus, with supply exceeding demand by 1.1 million barrels per day in September and 1.4 million in October, against an average surplus of 1.3 million last year. Crude shipments through the Strait of Hormuz have recovered to close to pre-war levels, though at higher cost. The physical market was already well supplied; the election removed the last reason to hold expensive barrels.
Equities welcomed the result. The S&P 500 closed 1.6 percent higher on Wednesday, and the pan-European STOXX 600 rose 0.5 percent to 660.33, close to a two-month high, according to Reuters. Mining led the advance, with ArcelorMittal up 6 percent after beating core-profit expectations, while solar supply-chain stocks were among the biggest gainers on hopes of more renewables support from a Democratic Congress.
The rally was selective. South Korea's KOSPI slid 4.8 percent and Taiwan's benchmark fell 2.6 percent as chipmakers sank; in Europe, ASML fell 2.7 percent and Soitec 4.5 percent. Data-centre stocks fell on expectations of tougher regulation, and Germany's Rheinmetall tumbled 14 percent after cutting guidance. The dollar index fell 0.06 percent to 101.41 after a 0.36 percent drop the prior session, the euro rose 0.12 percent to $1.1241, the yen firmed 0.08 percent to 158.25, and sterling rose 0.38 percent to $1.3462, near a seven-week high. Ray Attrill of National Australia Bank said the bond and dollar moves were traceable directly to the election result. The 10-year Treasury yield fell to 4.87 percent and the 2-year to 4.56 percent.
Gold rallied sharply. Spot gold rose 1.6 percent to $4,123.71 an ounce, its highest since 20 October, according to Reuters via The Hindu BusinessLine, with US futures at $4,133. Silver reached $52.61, platinum $1,519.90 and palladium $1,017.54; Citi has a 0-3 month gold target of $4,500. Bitcoin rose 0.60 percent to $80,660.59 and ether 0.45 percent to $2,428.15. US crude, gasoline and distillate inventories all fell last week as demand hit its highest in a year, the Energy Information Administration said on Wednesday — a backdrop that makes the scale of the oil sell-off all the more striking.
Illustration: A stock exchange trading floor with glowing market boards showing rising green charts.
Background
The US-Israeli war with Iran began at the end of February 2026 and sent shockwaves through energy markets. Fears that it could disrupt Gulf exports or threaten the Strait of Hormuz pushed crude higher and kept a war premium in prices for months, even as the physical market moved into surplus. Traders were paying for insurance against a supply shock that had not happened — and on Thursday, they began to cancel that insurance.
Central banks are also at a turning point. The Bank of England is due to decide on rates later on Thursday and is expected to raise them for the first time since August 2023, by 25 basis points. Matthew Ryan of Ebury expects a 7-2 vote, with Swati Dhingra and Alan Taylor dissenting. In Japan, minutes from the Bank of Japan's September meeting reinforced expectations of further hikes after rates hit a 31-year high of 1.25 percent. US private payrolls rose 86,000 in October, ADP reported, above the 69,000 expected, ahead of Friday's official nonfarm payrolls. Markets price an 81.2 percent chance of at least a 25-basis-point Federal Reserve rise in December, per CME FedWatch, up from 77.4 percent.
Why It Matters
For consumers, cheaper oil should ease petrol and diesel prices and moderate the energy costs embedded in almost every other price. That helps central banks fighting stubborn inflation, including the Bank of England, and leaves households with a little more spending power. For producers, a 20 percent weekly fall is a severe revenue shock, and JPMorgan's surplus figures suggest they have little leverage to push prices back up without cutting output.
For investors, Thursday showed that one political event rarely lifts all boats. Renewables rose on hopes of more support, data-centre stocks fell on regulation fears, miners rallied on earnings, and chipmakers slid. The KOSPI's 4.8 percent drop underlines how exposed the technology supply chain is to US policy shifts that have little to do with oil.
Gold's rise alongside shares is the most telling signal. Normally a share rally reduces demand for havens, yet gold hit its highest since 20 October. Investors are buying both the relief rally and the insurance policy. A weaker dollar reinforces the move: it makes oil cheaper for importers outside the US and lifts the dollar value of overseas earnings.
Illustration: Stacked gold bars with a rising golden price chart behind them.
What Happens Next
The Bank of England's decision later on Thursday is the immediate test. A 25-basis-point rise is expected, but the vote split and the bank's language on future moves matter as much as the decision, especially now that oil is falling. Its view on energy costs and the inflation outlook will be parsed line by line.
Friday brings the US nonfarm payrolls report. A strong reading would reinforce the 81.2 percent market pricing for a December Fed rise; a weak one would revive doubts about the economy. Either way it is likely to move bond yields and the dollar, feeding back into oil and gold.
The oil market faces its own test. Mukesh Sahdev, chief executive of XAnalysts, cautioned the sell-off may prove short-lived: the incoming Congress does not take office until January, so US policy options have not immediately changed, and commercial oil inventories in major consuming countries are near 15-year lows. If negotiations stall or there is a fresh incident in the Gulf, the war premium could return as fast as it vanished. Traders will watch Hormuz shipments closely. For now, markets have judged that a negotiated end is more likely than escalation — and are waiting for the facts to catch up.
Sponsored: explore today's featured sponsored offers
FAQ
Why did oil prices fall below $100 a barrel?
Brent fell to $93.65 and US crude to $86.98 after Democrats swept the US midterms on 3 November. Markets priced in a lower chance of renewed US-Israeli strikes on Iran and a greater chance of a negotiated end to the war. JPMorgan also noted a global oil surplus of 1.4 million barrels a day in October, according to Reuters.
How much have oil prices fallen this week?
Brent is about 20 percent lower this week, heading for its biggest weekly drop since April 2020. Both benchmarks tumbled more than 8 percent in the previous session, to their lowest since 31 August, according to Reuters.
Why did stock markets rise while oil fell?
Investors read the midterm result as reducing the risk of a wider Middle East war: the S&P 500 closed 1.6 percent higher on Wednesday and the STOXX 600 rose 0.5 percent to 660.33. Solar and mining stocks led, though chipmakers, data-centre stocks and some defence shares fell.
Why is gold rising at the same time as shares?
Spot gold rose 1.6 percent to $4,123.71 an ounce, its highest since 20 October, as the dollar weakened and Treasury yields fell. Some investors are buying gold as insurance even while shares rally, because the path to a settlement with Iran remains uncertain. Citi targets $4,500 over the next zero to three months, per Reuters via The Hindu BusinessLine.
What should markets watch next?
The Bank of England decision later on Thursday, US nonfarm payrolls on Friday, and any progress in negotiations over the war with Iran. Analysts warn the incoming Congress does not take office until January and commercial oil inventories are near 15-year lows, so volatility is likely to continue.
Sources
- Reuters, 5 November 2026 — Oil falls as US midterm results ease Iran war fears (Brent $93.65, WTI $86.98, weekly slide, JPMorgan surplus, Hormuz shipments, Gulf sources, quotes from June Goh and Mukesh Sahdev).
- Reuters, 5 November 2026 — Markets react to the midterm sweep (S&P 500, STOXX 600 at 660.33, ArcelorMittal, ASML, Soitec, Rheinmetall, KOSPI, Taiwan, solar and data-centre stocks).
- Reuters, 5 November 2026 — Dollar and bonds after the election (dollar index 101.41, euro $1.1241, yen 158.25, sterling $1.3462, Treasury yields, Ray Attrill quote).
- Reuters via The Hindu BusinessLine, 5 November 2026 — Gold rallies to $4,123.71, highest since 20 October (futures, silver, platinum, palladium, Citi $4,500 target).
- Reuters, 5 November 2026 — Bank of England preview (expected 25bp rise, first since August 2023; Ebury's Matthew Ryan, 7-2 vote, Dhingra and Taylor dissenting) and Bank of Japan September minutes (rates at a 31-year high of 1.25 percent).
- ADP via Reuters — Private payrolls up 86,000 vs 69,000 expected; CME FedWatch — 81.2 percent chance of at least a 25bp Fed rise in December, up from 77.4 percent.
- US Energy Information Administration, Wednesday — Crude, gasoline and distillate inventories all fell as demand hit its highest in a year.
- Reuters market data, 5 November 2026 — Bitcoin $80,660.59, ether $2,428.15; 10-year Treasury yield 4.87 percent, 2-year 4.56 percent.
Comments
Post a Comment