Crude oil prices reversed recent declines on Thursday, with Brent crude rising 4.0% to $98.38 per barrel and West Texas Intermediate gaining 2.9% to $90.65, marking the first gains in four trading sessions. The rebound followed a significant selloff the previous day when Democrats secured control of both chambers of Congress, creating questions about energy policy direction under a divided government.
Market participants initially interpreted the Democratic victories as potentially favoring negotiations with Iran and relief from Middle Eastern tensions. However, those expectations moderated as analysis firms reassessed the likelihood of diplomatic breakthroughs, with odds of a negotiated agreement revised downward. Iranian naval forces reported a tanker incident near the Strait of Hormuz, while two Russian diesel-carrying vessels altered their routes, complicating the crude supply picture.
Global crude supply dynamics showed signs of shifting, with Middle Eastern producers increasing exports significantly. Combined shipments from Saudi Arabia, the United Arab Emirates, Iraq and Kuwait reached 15.53 million barrels per day in October, up 10% from the previous month. Saudi Arabia led the increase with a 13% rise to 7 million barrels daily. These higher export volumes have created the first supply surplus in the region since July.
Energy sector stocks showed mixed performance despite the oil price recovery, with the energy benchmark ETF declining 1.6% as broad market selloffs weighed on valuations. Renewable energy equities initially gained on Democratic election results but surrendered those advances, though solar installer Sunrun surged 13.3% following strong third-quarter earnings that significantly exceeded analyst expectations. Democratic lawmakers are anticipated to scrutinize various energy policy matters beginning in January 2027, including previous administration agreements and project cancellations in Democratic-leaning states.
Natural gas markets remained relatively stable, with U.S. prices flat while European contracts rebounded slightly. The broader equity market declined, with technology stocks particularly pressured following concerns about data center expansion policies proposed by newly elected Democratic state officials.
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