By Irina Slav – Oct 28, 2026, 2:50 AM CDT
Oil traders appear to be preparing for a resumption of hostilities in the Middle East following the U.S. midterm elections on November 3, and if such a resumption does not take place, oil prices are likely to drop, ING commodity strategists wrote today in a note.
With President Trump repeatedly hinting at or outright saying he may restart attacks on Iran after the midterms, anticipation of new hostilities is only to be expected. However, as ING’s Warren Patterson and Ewa Manthey wrote, the escalation is not a done deal. And if it does not come to pass, there is only one way prices would go: down.
“An agreement between the US and Iran may not be needed for prices to pull back,” the analysts wrote. “If we get past the elections without renewed strikes on Iran, that might be enough for the market’s risk premium to start eroding.”
However, the significance of any hypothetical oil price decline is questionable, based on the market’s reaction to all those reports about oil flows out of Hormuz returning to—and even exceeding—pre-war levels. Initially, those reports did weigh on prices, but later the effect wore off as those reports clashed with others, about Iranian strikes on tankers, which have reached an all-time high this month. The attacks also show that the situation in the Persian Gulf is not back to business as usual.
Interestingly, while the crude oil market adopts a wait-and-see attitude, diesel prices are down following reports of Russian diesel on its way to the United States. Despite analyst assertions that the volumes agreed are too insignificant to change the market balance, the ICE gasoil crack spread, ING analysts said, is down to $70 per barrel, the lowest since early October and off record highs hit last month amid the global disruption in supply.
By Irina Slav for Oilprice.com
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Irina Slav
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Irina Slav has been writing about global energy markets since 2007, covering the oil and gas industry, energy security, commodities, and the…
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