Oil prices fell more than 8% on Wednesday, settling at their lowest levels since August 31, as the U.S. midterm election results and growing expectations of a potential diplomatic resolution to the conflict with Iran eased concerns about further supply disruptions. Brent crude futures declined $8.98, or 8.7%, to settle at $94.62 per barrel, while U.S. West Texas Intermediate (WTI) crude fell $7.97, or 8.3%, to $88.12 per barrel.

The election results, which shifted control of both chambers of Congress to Democrats, raised questions about the future direction of U.S. policy toward Iran. President Trump indicated that the United States had no immediate plans to strike Iran, while acknowledging that the conflict contributed to his party’s election losses. Expectations of reduced military escalation and a possible return to negotiations put additional downward pressure on crude prices.

However, the prospect of a negotiated agreement remains uncertain. Qatar has stepped up mediation efforts to prevent further escalation, although Iranian officials indicated that Washington and Tehran remain far from reaching an agreement. Iran’s leadership also signaled that its position toward the United States would remain unchanged regardless of the election outcome.

Middle East oil exports remain below pre-war levels despite a partial recovery in shipments. Gulf exports of crude oil, condensate and refined products averaged 17.1 million barrels per day in October, compared with 18.9 million barrels per day in September, according to Vortexa. October shipments remained approximately 75% of pre-war levels. Meanwhile, continued threats to commercial shipping and renewed Houthi claims of attacks on Saudi targets have kept regional security concerns elevated. The United Arab Emirates is also considering a third oil pipeline to expand export capacity while reducing reliance on the Strait of Hormuz.

U.S. crude inventories declined last week, contrary to expectations for an increase. According to the Energy Information Administration (EIA), commercial crude oil stocks fell by 865,000 barrels to 409.8 million barrels for the week ended October 30, compared with analyst expectations for an increase of approximately 877,000 barrels. Gasoline and distillate inventories also posted declines, pointing to tighter domestic fuel supplies.