WTI Drops Below $86.50 as Traders Bet Iran War May Ease

WTI crude slipped below $86.50 a barrel on Thursday, trading near $86.40 in early European hours. That put the US oil benchmark close to its $86.10 100-day average, which analysts see as a support level. The drop followed a week of heavy selling as traders reconsidered the chances that the Iran war would spread. ^1,2

That $86.10 support comes after Democrats won majorities in both the US Senate and House on Tuesday, taking control from President Donald Trump’s Republicans. Trump said Washington had no immediate plans to strike Iran, then acknowledged the war helped drive his party’s election defeat. Traders read the result as a reason for him to seek a deal rather than risk more conflict. Still, the incoming Congress does not take office until January. ^1,2

The January handover matters because the election has changed expectations, not ended the fighting. Brent crude fell to $93.82 on Thursday, while WTI dropped to $86.92 in another report, after both benchmarks lost more than 8% in the previous session. Analysts said oil shipments through the Strait of Hormuz had recovered close to pre-war levels, helping push the market back into surplus. Yet renewed conflict could disrupt supply again, and traders are unsure whether Tehran and Washington can agree on terms. ²

That uncertainty is reflected in Eurasia Group’s revised estimates: it put the chance of renewed US strikes at 60%, a deal at 10%, and a continued standoff at 30%. Those figures show why falling prices do not mean the danger has passed. US crude inventories also fell by 865,000 barrels last week, slightly less than expected. For now, traders will watch whether WTI holds above $86.10 and what steps Trump takes before Congress changes hands in January. ^1,2