Oil prices hit their lowest levels since August on Tuesday after US President Donald Trump reassured markets that a fresh military intervention against Iran would not be necessary — a signal that the Republicans' heavy defeat in the midterm elections is pushing the US leader toward greater caution on the war.

North Sea Brent crude, the European benchmark, was trading down 2.17% at $90.61 per barrel at the time of writing, after having already shed nearly 6% in the previous session. West Texas Intermediate (WTI), the US benchmark, fell 2.15% to $85 a barrel, while TTF natural gas, traded in Amsterdam, slipped 1.71% to €81.08 per megawatt-hour.

Despite signalling a potential de-escalation of the conflict, Trump reiterated that the United States remains "ready for action". "Iran, from a military standpoint, is effectively finished," he told reporters on Monday after meeting the Prime Minister of Qatar — which has been mediating negotiations with the Islamic Republic — at the White House.

"The midterm election results have significantly reduced Trump's options for a large-scale, long-term military operation against Iran — and that is being reflected in his rhetoric," Takahiro Asaoka, senior economist at the Itochu Research Institute, told Bloomberg. This is stripping out part of the geopolitical risk premium embedded in oil prices, though Brent will likely remain above $85 a barrel in the absence of a deal with Tehran, he added.

According to international media reports, Democrats are considering using a government shutdown as a political weapon to pressure Trump into abandoning the war effort entirely. Democrats and Republicans have until 11 December to agree on federal government funding, in a Congress that remains deeply divided — at least until January, when the new composition takes office.