Over the past two days, the international crude oil market has experienced a rare one-sided plunge, with highly leveraged speculative funds exiting the market, further amplifying market volatility. Liquidity in many major contracts instantly shifted towards one-way selling. ICE Brent crude oil settled down 8.7%, breaking below $95 per barrel, with intraday lows further declining; WTI crude oil also plummeted by approximately 8.3%, closing near $88.12 per barrel. The cumulative decline this week has exceeded 14%. Such a drop in magnitude and speed is unprecedented in the oil market previously dominated by geopolitical premiums. Long positions betting on an escalation of the Iranian conflict and supply disruptions through the Strait of Hormuz suffered heavy losses, with many speculative long positions forced to close at a loss. Many hedge funds and CTA trend accounts that had previously bought at high prices reached their risk control limits, leading to passive selling and a chain reaction of negative feedback. The market quickly shifted from "rushing to escalate risk" to "rushing to end the war," with the risk premium being wiped out almost in a stampede. Has the drop been excessive? The mainstream judgment of institutions and traders is highly consistent: the Democratic sweep of both houses of Congress was the direct catalyst, and the market began to significantly lower the probability of a protracted and escalating Iranian war. The ING Energy team pointed out that the core of the Brent crude oil price crash was "election-driven risk premium retracement." With the Democrats controlling Congress, war funding and oversight will be significantly tightened, increasing hopes for a faster end to the war. They also emphasized that the fundamentals did not collapse simultaneously—US distillate fuel inventories plummeted by 3.57 million barrels, falling below 100 million barrels for the first time since 2003, and refined product inventories remain tight. Therefore, the speed and magnitude of the oil price decline "appear somewhat excessive." The relatively low rigidity of distillate fuel inventories means that downstream refining demand has not disappeared, providing underlying support for oil prices. Relying solely on geopolitical narratives is unlikely to drive oil prices down indefinitely. Andy Lippo, president of Lippo Oil, believes the election results have convinced the market that Trump is now more motivated to seek a deal with Iran. The possibility of Democrats limiting military spending, coupled with Trump's previous signals of "cutting some aid to Israel," has increased Washington's ability to constrain its allies. Rebecca Babin, senior energy trader at CIBC, bluntly stated that the market is in a "shoot first, ask questions later" emotional mode, and the sell-off may have gone too far. The previous consensus was that a Democratic landslide victory would force Trump to escalate and demonstrate toughness, but Vance's public attribution of the midterm defeat to war directly shattered this assumption. Bob McNally of Lapidan Energy cautioned that risks remain: Iran's stance has not softened, and Trump has already paid a huge political price to "prevent Iran from acquiring nuclear weapons," making a complete abandonment unlikely. The probability of a military option remains. Any sudden localized conflict or missile attack could quickly ignite safe-haven buying, driving a temporary rebound in risk premiums. Has the market overdrawn the speed of the eventual resolution? The market's initial reaction was rational and largely reflected the current visible political constraints, but there may have been an overestimation of the pace. US Vice President Vance publicly stated that "the reason we failed was the war," and Trump himself confirmed this assessment. Coupled with market discussions about the Secretary of Defense potentially facing greater political pressure, this clearly signals that the White House is reassessing the costs of war. As the most sensitive geopolitical barometer, oil prices will inevitably react immediately. After the Democrats officially take control of Congress in January, the funding and legitimacy for sustained high-intensity military operations will be significantly compressed, and the general trend of declining risk premiums is correct. What truly deserves scrutiny is the speed and magnitude. Currently, there has been no new substantial disruption to Persian Gulf oil flows, and US refined product inventories, especially diesel, remain tight. Oil prices wiping out most of the geopolitical premium within two days is equivalent to trading in the optimistic scenario of "a relatively quick end to the war + a complete recovery of supply" in one go. The reality is that Trump still retains executive and military initiative, and has room to maneuver, at least until the new Congress takes office. Therefore, current oil prices have already factored in a significant portion of the expectation of a "smooth soft landing," pricing in medium- to long-term events like negotiations and ceasefires all at once, thus significantly extending the window for realizing the positive effects. If subsequent negotiations falter or limited military action occurs, the rebound could be swift. The Policy Shift After the Midterm Election While Trump's decision-making function has indeed changed after the election, this shift is not automatic. Regarding checks and balances, with the Democrats controlling both the House and Senate, war funding, authorization, and oversight will be significantly tightened. Trump can continue to use existing authorizations to maintain pressure such as a naval blockade, but the political and legal resistance to a large-scale new round of airstrikes or escalation has increased significantly. He remains Commander-in-Chief, but no longer possesses the advantage of a "virtually unchecked Republican Congress." Every large-scale military expenditure and operation by the White House will face layers of constraints, including congressional hearings and budget inquiries, significantly increasing the cost of action. Has Personal Thinking Changed? Vance's statements and Trump's own attribution of the war indicate that his team has acknowledged the substantial damage the war has caused to his election prospects. Trump has always been pragmatic and values a "winning" narrative. If escalation continues without a clear victory, he will only become more politically passive; if he can achieve some demonstrable results through negotiations or limited pressure, he might be more willing to shift course. His statement that he has "no immediate plans to attack Iran" is itself a signal. Israel's influence remains, but its weight may have decreased. Trump's earlier remarks this week about cutting some aid to Israel suggest that Washington is recalibrating its constraints on allies. If Israel continues to push a hardline line, it may conflict with Trump's current political interests. One question remains: Is Trump truly willing to accept this? In this war against Iran, Trump has become "blinded by defeat." His crushing defeat in the midterm elections was openly attributed to the war, high oil prices have hurt voters, and his political capital has been severely depleted. If he were to withdraw now and accept an outcome without a major victory, the narrative might be worse than that of some of his predecessors whom he criticized—lacking both the glory of "ending the war" and the legacy of "completely resolving the problem." Is Trump truly resigned to this? He is extremely sensitive to being seen as a loser. A complete and unconditional retreat is unlikely; he is more likely to seek a path that can both mitigate losses and be packaged as a "victory": increasing economic and maritime pressure, pushing for limited negotiations, or demonstrating toughness at key junctures before quickly making a deal. The space for further significant escalation to win has been compressed by the election results, but simply conceding defeat and withdrawing is not in his nature. This dilemma keeps the US-Iran situation in a state of flux for a long time, making a one-sided outcome unlikely, corresponding to high oil price volatility. In summary , the peak of geopolitical risk premiums has likely passed, and the central oil price faces downward pressure. If there is substantial progress in negotiations or a relaxation of sanctions, Brent crude may seek support further towards $90 or even lower; conversely, if Iran takes a hard line, negotiations stall, or Trump chooses limited strikes to preserve his "anti-nuclear legacy," oil prices are likely to experience a technical rebound from current levels. From a fundamental perspective, there are no bright spots on the demand side. The weak recovery of global manufacturing is suppressing crude oil consumption. On the supply side, once the geopolitical premium subsides, the return of Persian Gulf production and exports will suppress prices. In the short term, oil price trends will be jointly determined by "the progress of political narratives" and "refined product crack spreads"—the former determines the direction of risk premiums, and the latter determines the floor for further declines. This sharp drop is a rapid repricing of political realities by the market; the direction is correct, but the pace is too fast. Long positions have already suffered significant losses, while short positions need to be wary of short-covering rallies caused by repeated policy changes. What can truly change the trajectory of oil prices is not verbal statements, but rather a visible reduction in military activity, concrete negotiation signals, and whether US distillate fuel inventories remain tight. Traders need to abandon one-sided betting strategies and focus on tracking high-frequency geopolitical news and weekly distillate fuel inventory data, flexibly adjusting their long and short positions.