--- title: "Will US Midterms Reshape Iran Situation? Citi: Short-term Volatility, Long-term De-escalation; Brent Crude May Fall Below $70 Next Year" type: "News" locale: "en" url: "https://longbridge.com/en/news/304423835.md" description: "Citi believes that despite positive diplomatic momentum recently, market volatility will persist during the \"lame-duck\" window before Democrats officially take control of Congress. Investors should not ignore the possibility of a renewed escalation in the short term. In the base case scenario, Citi forecasts that Brent crude oil will fall below $70 per barrel by 2027, while assigning a 30% probability to the tail risk of oil prices soaring to $120" datetime: "2026-11-05T09:30:33.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/304423835.md) - [en](https://longbridge.com/en/news/304423835.md) - [zh-HK](https://longbridge.com/zh-HK/news/304423835.md) generator: "portal-rs" --- # Will US Midterms Reshape Iran Situation? Citi: Short-term Volatility, Long-term De-escalation; Brent Crude May Fall Below $70 Next Year The Democrats' decisive "Blue Wave" victory in the US midterm elections has brought two opposing forces to the oil market: warming diplomatic negotiation momentum is pushing oil prices down, but the risk of renewed escalation has far from dissipated. Following the release of the midterm election results, Brent crude prices promptly fell to around $95 per barrel, while the European natural gas benchmark TTF simultaneously dropped to 85 euros per megawatt-hour. Vice President Vance publicly posted after the election, acknowledging voters' strong dissatisfaction with high energy prices and the prospect of a US-Iran war. Trump indicated that he would not escalate conflicts in the Middle East for the time being. Iran's Supreme Leader had previously authorized the government to restart negotiations, albeit with tough rhetoric. This situation has directly impacted bullish sentiment in the oil market. Citi believes that **despite positive diplomatic momentum recently, market volatility will persist during the "lame-duck" window before Democrats officially take control of Congress. Investors should not ignore the possibility of a renewed escalation in the short term. In the base case scenario, Citi forecasts that Brent crude oil will fall below $70 per barrel by 2027, while assigning a 30% probability to the tail risk of oil prices soaring to $120.** ## Blue Wave Victory Boosts Diplomatic Negotiation Momentum The Democrats' decisive midterm victory has significantly strengthened the near-term impetus for US-Iran negotiations. Trump has stated that he will not escalate conflicts in the Middle East, and Iran's Supreme Leader has authorized the government to engage in negotiations, establishing preliminary political conditions for contact between the two sides. According to Citi Research, **after Democrats take control of Congress, they will check the White House's foreign policy through "power of the purse" and war powers legislation, although their seats are insufficient to override presidential vetoes.** **Meanwhile, potential presidential successors within the Republican Party, considering post-Trump era political dynamics, may lean towards promoting negotiated solutions rather than sustained conflict. Trump himself may focus more on his historical legacy towards the end of his term, prompting him to seek resolution rather than expansion of the US-Iran and Russia-Ukraine conflicts.** Citi also pointed out that the political stalemate in Israel remains a variable. Current Prime Minister Netanyahu may continue to pressure the US to take a hard line against Iran. However, the US midterm results have also somewhat increased the likelihood of Gadi Eisenkot becoming Israel's new Prime Minister. If this happens, it will shorten Netanyahu's window for exerting pressure. ## Two-Month "Window Period," Escalation Risk Should Not Be Underestimated Citi warns that from now until January 3, when Democrats officially take control of Congress, **there exists a "lame-duck" period with relatively loose political constraints. The White House may seize this opportunity to advance foreign policy goals and personnel changes, which could either accelerate the negotiation process or trigger a new round of conflict escalation.** The US Navy's USS Theodore Roosevelt aircraft carrier is expected to arrive in the Middle East by late November. According to The Guardian, this deployment may create a rhythm of brief calm before arrival and a renewed rise in escalation risk afterward. Additionally, high-level meetings between the US and Russia may take place before the end of the year, the results of which could impact both the Russia-Ukraine conflict and US-Iran relations. Considering these factors, **Citi believes that the market may remain volatile over the next two months. Even if the medium-to-long-term direction points towards a diplomatic solution, short-term uncertainty remains high.** ## Citi Base Case Expectation: Brent Crude May Fall Below $70 in 2027 Citi Research has established two scenarios: In the base case scenario (60% probability), despite the lingering risk of recent escalation, multiple paths point to a gradual cooling by the end of the year, with Brent crude expected to continue declining and fall below $70 per barrel by 2027. In the bullish scenario (30% probability), a renewed escalation of conflict will drive Brent crude prices back to $120 per barrel next year. Citi pointed out that **in the medium term, the internal political landscape in the US is increasingly leaning towards diplomatic solutions for the US-Iran and Russia-Ukraine conflicts.** The Democrat-controlled Congress will have more room to push for increased support for Ukraine, including military aid and intelligence cooperation. The US government may also seek to advance a ceasefire framework before the G20 summit. Considering that US support for Ukraine will tend to increase after the Democratic Congress takes office in January, there may currently be a small and brief window of opportunity for Russia-Ukraine negotiations. ## Clean Energy Benefits, AI Data Centers Under Pressure Citi believes that the Democrats' decisive midterm victory will also have profound implications for energy policy. Democratic control of Congress will provide policy support for renewable energy and electric vehicle tax credits, reversing the obstructionist stance of the Republicans over the past two years. At the same time, AI and data centers are facing significant political headwinds in key states such as Texas, Georgia, and Ohio. The election results will further increase resistance to the growth of electricity and natural gas demand in these regions, marginally suppressing expectations for related infrastructure investment. ### Related Stocks - [BNO.US](https://longbridge.com/en/quote/BNO.US.md) - [C.US](https://longbridge.com/en/quote/C.US.md) ## Related News & Research - ['The Clock Is Ticking,' Says Investor About Oracle Stock](https://longbridge.com/en/news/304470769.md) - [Micron Technology, Inc. $MU Stock Sold by Focused Wealth Management Inc](https://longbridge.com/en/news/304416366.md) - [Tesla, Inc. $TSLA Shares Bought by 3Chopt Investment Partners LLC](https://longbridge.com/en/news/304415329.md) - [Li Ning Declares Special Dividend of RMB 2.32 Per Share](https://longbridge.com/en/news/304415504.md) - [Applied Optoelectronics Secures $200 Million Credit Facility With East West Bank as Agent](https://longbridge.com/en/news/304350245.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**