The Commodities Feed: US midterm elections key for oil market
The oil market is poised for volatility this week as the geopolitical landscape remains uncertain ahead of the US midterm elections. As highlighted in the report from ing-think, concerns about potential escalations in the Persian Gulf linger, particularly regarding US-Iran tensions which could markedly influence oil prices. Recent trading has suggested that prices might stabilize or push upwards if the elections result in heightened tensions, but there are indications of some diplomatic avenues as Iranian officials engage in talks, potentially moderating market fears. This backdrop suggests key price points to watch, especially as players adjust their positions in anticipation of any shocks throughout the week.
What the desk is arguing
The desk posits that the oil market is experiencing a buildup of nervousness, heavily influenced by expectations surrounding the US midterm elections. Per the full note from ing-think, there is a sense that market pricing reflects an anticipation of geopolitical risks associated with escalation in the Persian Gulf following election outcomes. Currently, oil prices have closed above $113 per barrel, underpinning this volatility.
Furthermore, recent developments indicate a significant increase in maritime activity in the Strait of Hormuz, suggesting a complex interplay between market confidence and geopolitical risks. As noted, pricing is currently influenced by concerns regarding US and Israeli military actions toward Iran, which will be a crucial factor to monitor in the short term.
Where it sits in our coverage
With no specific target established in our internal coverage, the focus remains solely on the geopolitical factors influencing oil dynamics without definitive benchmark prices currently to measure against.
How other firms see it
Opinions vary within the banking sector regarding future oil price trajectories. Firms such as jpmorgan foresee potential stabilization near current levels while bofa suggests a more cautious outlook aligning with lower price thresholds.
Related currency implications can be found in the oil-linked pairs such as USD/CAD and AUD/USD, which are likely to reflect movements in crude oil prices as geopolitical tensions evolve. The impact of oil prices on these currency pairs should be closely monitored given the potential for volatility following the electoral outcomes.
What the calendar says
There are no imminent events on the calendar that will provide additional catalysts for price movement in the oil markets, meaning that traders should remain vigilant for any unexpected geopolitical developments as the midterm elections draw nearer.
Key takeaways
- 01Oil market volatility is heightened ahead of the US midterms due to geopolitical concerns.
- 02Current oil prices are above $113/bbl, reflecting market apprehensions and potential escalation of tensions.
- 03Ongoing diplomatic talks with Iran could influence price stabilization, but risks remain.
- 04No immediate events on the calendar amplify the focus on geopolitical developments.
Market implications
Traders should watch for any substantial shifts in oil prices, particularly in relation to developments in US-Iran relations. Key levels to monitor would be the $113 mark for potential support or resistance as geopolitical risks unfold in the lead-up to the elections.
Risks to this view
A reversal of the current pricing trend could be triggered if the midterm elections lead to a clear diplomatic breakthrough with Iran, thereby diminishing the perceived geopolitical risk premium in the oil market. Additionally, any aggressive military action could further escalate tensions and impact market sentiment.
Articles The Commodities Feed: US midterm elections key for oil market Published 02:17 Commodities daily Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download The oil market is likely to remain nervous this week ahead of the US midterm elections. The market has been increasingly pricing in the risk of escalation in the Persian Gulf following the elections, but there is still a glimmer of hope for diplomacy Warren Patterson and Ewa Manthey Energy – Ukraine resume attacks on Russian refineries Oil prices finished strong last week, with ICE Brent settling almost 2.4% higher on Friday to close above $113/bbl. It was also the Dec-26 contract expiry; it settled at $117.64/bbl on its last trading day.
Vessels have faced a growing number of attacks in recent weeks. Yet this coincides with signs that more traffic is flowing through the Strait of Hormuz. Fears remain high over the potential for fresh US and Israeli strikes on Iran following the US midterms.
Reports say that President Trump wants to give diplomacy a chance are weighing on prices in early morning trading today. Iranian negotiators have been in Doha over the weekend, holding talks with Qatari mediators. It remains to be seen whether this will lead to anything.
The price action in oil in recent weeks reflects a market increasingly bracing for the potential for more hostilities between the US and Iran. If the midterms pass with neither strikes nor a deal, the key question is whether the market continues to price in a substantial geopolitical risk premium or whether that premium gradually begins to unwind. Given that many of the key developments in this conflict have unfolded over weekends, the market may have to hold its breath until the end of the week.
Meanwhile, in Russia, the brief respite that refiners received from Ukraine appears to have ended. Attacks on Russian refiners resumed towards the end of last week. The roughly 2-week pause had seen the ICE gasoil crack fall below $70/bbl and trade to its lowest level since early October.
Further attacks would likely provide a floor to the crack, with strikes casting doubt over how much diesel Russia will export. Russia’s deputy prime minister said that Russia plans to export 2.15m tonnes of diesel in November, up from a little more than 500kt in October. OPEC+ met over the weekend to discuss output policy for December, with no surprises.
Members decided to keep output targets unchanged for the month. Given disruptions in the Persian Gulf, most members are producing well below their production target. The latest positioning data shows that speculators increased their net long in ICE Brent by 3,576 lots over the last reporting week to 245,457 lots as of last Tuesday.
Fresh longs drove the move. Meanwhile, the net speculative long is still some distance away from the year-to-date high of around 430k lots seen in March. This suggests that with the right catalyst, speculators could add to this position.
A strong catalyst would be needed, though, given that from a risk-reward perspective it may not make sense to take too much risk on the long side at current price levels. European gas prices saw significant strength at the end of last week, with TTF settling more than 6% higher on Friday, near EUR104/MWh. Prices eased slightly in early morning trading today.
Weather forecasts for NW Europe show colder-than-usual weather this week, leading to potentially large storage draws. EU gas storage peaked at just under 75% last Tuesday and has been edging lower since, suggesting the heating season is now underway. With a tight balance through the winter, the market is likely to remain extremely volatile, and weather will prove to be even more important than usual.
Metals - Gold hits one-year low Gold fell to its lowest level in a year at the end of last week as oil prices surged amid inflation concerns and expectations that interest rates could stay higher for longer. Prices dropped 3.65% to $3,874.62/oz, with the sell-off in technology shares adding to pressure as investors reduced positions to cover losses elsewhere. For now, higher energy prices, rate expectations and the risk of further liquidation across broader markets remain headwinds for precious metals.
Silver has been hit harder, sliding more than 6% and extending its October decline to roughly 18%. The widening gold-silver ratio also points to gold continuing to outperform silver during the latest precious-metals correction. In industrial metals, copper prices also moved lower as the wider risk-off mood spilled into markets.
Underlying fundamentals remain supportive, with signs of tightness still evident across the physical market. The LME cash-to-three-month backwardation narrowed by almost $48/t on Friday to $174.85/t, but remains elevated, while the Yangshan premium rose above $200/t last week. This suggests refined copper availability remains constrained despite the pullback in futures prices.
That tightness should provide a floor under prices, although at elevated levels we could see some resistance from price-sensitive demand. Agriculture — Corn slides on harvest pressure CBOT corn prices extended losses for a second consecutive month, falling nearly 11% last month, the largest monthly decline since June 2023. The sell-off was driven by increased harvest supplies, weaker export demand, and easing concerns over Black Sea disruptions.
US farmers had harvested 60% of their corn crop as of 25 October, up from 44% a week earlier, boosting near-term supply. Weekly US corn export sales declined 15% week-on-week to 1,303.9kt as of 22 October. Market sentiment is under pressure amid expectations of lower geopolitical risk following renewed discussions involving Russia, Ukraine, and the US.
This could mean more stable grain shipments from the Black Sea region. Speculators reduced their net long corn positions by 90,314 lots for the sixth consecutive week to 55,314 lots. Traders took profits following the summer weather-driven rally and reassessed supply risks amid improving crop conditions and easing geopolitical tensions.
Among other soft crops, CFTC data shows that money managers increased their net bearish bets in CBOT wheat by 23,725 lots to 74,859 lots as of 27 October 2026. The move was driven by a rise in gross short positions. This was driven by improving harvest progress in Australia and Argentina, coupled with expectations for the second-largest global wheat crop.
For soybeans, the net speculative long position fell by 21,536 lots to 185,400 lots, as stronger export competitiveness from Brazil prompted traders to reduce bullish exposure. Strait of Hormuz Speculators Russia-Ukraine Precious metals Persian Gulf OPEC+ Natural gas Midterm elections LNG Iran war Inflation pressures Grains Diesel Copper Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.
Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Warren Patterson Head of Commodities Strategy Warren Patterson is Head of Commodities strategy based in Singapore. He joined the bank in April 2016 and covers the entire commodities complex. Previously, he worked at a commodities trade house… Ewa Manthey Commodities Strategist Ewa Manthey is a Commodities Strategist based in London.
She joined the bank in September 2022 and covers the entire commodities complex, with a particular focus on the metals markets. She has… In this article Energy – Ukraine resume attacks on Russian refineries Metals - Gold hits one-year low Agriculture — Corn slides on harvest pressure
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