Risk of Iran conflict escalation persists despite Democratic midterm gains

Analysts warned that the United States and Iran are still moving toward renewed hostilities despite the Democrats' decisive midterm victory, which gave them comfortable majorities in both chambers. Crude oil prices fell more than 16% over five trading days after Vice President JD Vance linked the Republican loss to the war, raising questions about continued support for the conflict within the administration.

The Democrats intend to use their congressional majorities to pass a war-powers resolution that would require President Donald Trump to end the war, but the resolution is not expected before the new Congress convenes in January, analysts said.

"Throughout the week, we were struck by the divergence between deepening escalation concerns in the Gulf and the headline-driven off-ramp optimism of market participants thousands of miles away," said Helima Croft, head of global commodity strategy at RBC Capital Markets, in a note to investors.

Since the election, several oil tankers have been attacked near Oman, killing one seafarer, and Iran-aligned Houthi forces in Yemen have continued missile strikes on Saudi Arabia. A third U.S. carrier strike group is en route to the region, and consulting firm Rapidan Energy estimates an 80% probability that fighting could resume as diplomatic efforts stall.

President Donald Trump told reporters he would decide soon whether to conduct further strikes on Iran. "I would rather not destroy the rest of the country if possible but maybe I'll have to," he said, adding, "We're locked and loaded. If we have to do the rest of the Iran thing, we're very much locked in."

Bob McNally, president of Rapidan and former energy adviser to President George W. Bush, said crude prices could rise above $100 a barrel if fighting resumes, noting Brent crude was trading above $97 and U.S. crude around $90. He added that Trump is determined to prevent Iran from acquiring a nuclear weapon, while the Iranian regime is unwilling to relinquish its nuclear capabilities.

Former energy adviser to Joe Biden, Amos Hochstein, warned that a renewed war would push gasoline, diesel and jet fuel prices higher. Tehran’s Supreme Leader’s social-media account claimed the U.S. “collapse” had accelerated after the midterms.

Congress is unlikely to pass a war-powers resolution before the Democrats take office in January, and Trump could veto any such measure. Croft noted that the main leverage for Congress will be funding decisions, as the current government funding expires on Dec. 11 and negotiations for a continuing resolution could extend into 2027, potentially reshaping the administration’s long-term budget outlook.

Trump discussed de-escalation with the emir of Qatar, according to Qatar’s state news agency, while an unnamed senior Iranian official told Reuters that Tehran had sent a nuclear proposal to the United States through Qatar, pending U.S. concessions. Trump dismissed the diplomatic overtures, stating, "Iran will never have a nuclear weapon. They're not doing anything without our approval. It doesn't make any difference what they're looking at."