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The U.S. and Iran remain on course for renewed war despite hopes that the Democrats’ decisive midterm election victory could force the conflict toward an end. Analysts warn that mounting tensions in the Middle East have not matched the optimism gripping distant markets.

Crude oil prices fell more than 16% over the last five trading days after Vice President JD Vance publicly blamed the Republicans’ stinging election loss on the war. His remarks raised questions about whether the administration still has sufficient support to continue the conflict with Iran.

Democrats plan to use comfortable majorities in both chambers of Congress to pass a war powers resolution demanding that President Donald Trump end the war. Yet they will not take control until January, and tensions across the region have not eased since the election.

“Throughout the week, we were struck by the divergence between deepening escalation concerns in the Gulf and the headline driven off-ramp optimism of market participants thousands of miles away,” Helima Croft, head of global commodity strategy at RBC Capital Markets, told investors Friday.

Several oil tankers have come under attack near Oman since the election, killing one seafarer, according to maritime security agencies. Iran’s Houthi allies in Yemen have also continued firing missiles at neighboring Saudi Arabia.

The U.S. military buildup has continued, with a third carrier strike group heading toward the region. Rapidan Energy sees an 80% chance that fighting will resume as diplomatic efforts stall.

Trump told reporters Thursday that he would soon decide whether to attack Iran again. “I would rather not destroy the rest of the country if possible but maybe I’ll have to,” Trump said in the Oval Office. “You’ll know soon enough.”

“We’re locked and loaded,” the president said. “If we have to do the rest of the Iran thing, we’re very much locked in.”

Bob McNally, president of Rapidan and a former energy advisor to President George W. Bush, said renewed fighting would push crude oil above $100 a barrel again. Brent crude, the international benchmark, traded above $97 Friday, while U.S. crude stood near $90.

“President Donald Trump is determined as a legacy item, almost at all costs, to prevent Iran from getting a nuclear weapon, having them give up their nuclear capabilities,” McNally told CNBC’s “ Squawk Box Asia ” on Friday.

McNally said the Iranian regime is unwilling to surrender its nuclear capabilities. The escalation dynamic therefore remains intact as long as the core disagreement between Washington and Tehran persists.

Amos Hochstein, a former energy advisor to President Joe Biden, said the risk of war remains alive, particularly because Trump faces no future elections. Hochstein told CNBC’s “ Power Lunch ” Friday that gasoline, diesel and jet fuel prices would all surge as a consequence.

Tehran has taunted the Trump administration since the election. The social media account of Iran’s Supreme Leader Mojtaba Khamenei said the “process of the U.S.’s collapse has accelerated” following the midterm results.

Congress is unlikely to pass a war powers resolution before Democrats take control in January, and Trump could veto such a measure. Croft said Congress’ principal leverage would instead come through its power over government spending.

Government funding expires Dec. 11, and negotiations over another continuing resolution could extend into 2027, according to Croft. A delay would give Democrats more leverage after they assume control in January.

“Importantly, deferring funding decisions would not immediately constrain Trump’s ability to conduct military operations, but could significantly reshape the administration’s longer-term funding outlook,” Croft told investors.

Trump discussed diplomatic attempts to reduce regional tensions with the emir of Qatar during a Friday phone call, according to Qatar’s state news agency. An unnamed senior Iranian official told Reuters that Tehran had sent a nuclear proposal to the U.S. through Qatar.

The Iranian official said Tehran would discuss that proposal only after the U.S. met its demands. Trump appeared to dismiss the diplomatic activity Thursday, declaring, “Iran will never have a nuclear weapon.”

“They’re not doing anything without our approval. It doesn’t make any difference what they’re looking at,” Trump said of the diplomatic efforts, leaving markets to weigh falling crude prices against an 80% probability of renewed fighting calculated by Rapidan Energy.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.