The US Democrats ‘ “blue wave” of midterm election victories is already causing ripples across the rest of the world, where trade partners, strategic allies and enemies all see implications in the result.
It is not immediately clear how US President Donald Trump’s loss of control over Congress will shape the course of his country’s eight-month-old conflict with Iran. Voters have shown they are weary of the conflict, which many blame for painfully higher fuel prices. Rivals seeking to unseat Prime Minister Benjamin Netanyahu seized on the Democrats’ wins to lambaste him for a loss of bipartisan American support under his watch, as they seek to forge a coalition following an inconclusive Israeli election last week. “After the US midterm losses, President Donald Trump’s capacity to impose arbitrary tariffs will certainly face a challenge.
Some Gulf governments now believe Trump has more reason than ever to seek a peace deal and that another full-scale assault on Iran is less likely after the midterms, two sources familiar with Gulf government thinking told Reuters. “If Tehran recognises that Trump needs a deal, but not just any deal, a genuine opportunity could emerge to end the war,” said Ebtesam al-Ketbi of the Emirates Policy Center. However, reading the vote as weakness could instead invite “a new military escalation”, she added. Oil dropped for a third day, but tight stock levels prevented a larger selloff, analysts said. “The market increasingly appears to be betting that President Trump wants to put the Middle East war behind him,” said Saxo Bank analyst Ole Hansen. However, broad US-China economic relations will likely maintain a state of “fragile stability”, said Chim Lee, industrial policy analyst at the Economist Intelligence Unit in Beijing. At some point he needs the Congress’s approval for trade actions and, to that extent, he’s weakened,” said Anup Wadhawan, a former trade secretary to India’s federal government. “A Democratic sweep of Congress would put pressure on tech and potentially bring regulatory pressure on everything AI and possibly slow down the wild, wild west growth figures that we see daily and often take for granted,” said Jake Dollarhide, chief executive of Longbow Asset Management in Oklahoma.
The energy market wagered on Wednesday that the elections could breathe more life into US-Iran peace talks.
