Brent crude fell 3.7% to $109.23 a barrel by 0900 GMT on Monday 2 November1. US West Texas Intermediate dropped 3.8% to $100.14 as indirect US-Iran talks in Doha stretched into a third day over the weekend1, 2. A later reading put Brent at $108.84, down 4.05% for the day5.

The move reflects hope of a deal rather than a deal. Washington has not answered Iran's proposal, US midterm elections are on Tuesday, and attacks on ships in the Gulf continued through the weekend2, 6. Brent had ended October at a six-month high1.

What Iran has offered

Iran's foreign minister, Abbas Araghchi, told Al Jazeera that Iran would open the Strait of Hormuz within two days2. That would follow the US lifting its blockade on oil ships, ending its block on the release of Iranian assets and ending sanctions on Iranian oil exports2. Qatar is negotiating the release of more than $6bn in Iranian assets. It has tried to compress that sequence from seven days to two, which Iran accepted2.

Not all of this is settled. The asset figure comes from mediation reporting, and the US has not published a response2. Iranian negotiators left Doha on Sunday, and an official briefed on the meeting told Reuters that the departure was not caused by difficulties in the talks1. Araghchi said there were no plans for direct talks with Washington and hoped the US would choose "diplomacy over other paths"2.

US President Donald Trump said on Saturday that negotiations were "going fine but you know they're not very reliable"2. Market data provider Trading Economics said reports indicated Trump intends to allow diplomacy more time before deciding whether to resume strikes after the midterms5. The UAE's envoy, Anwar Gargash, said Gulf states were "braced for the worst"2.

Why the freight and fuel bill lags

Crude futures are the fastest part of the chain. War-risk insurance, freight and fuel surcharges reprice on their own cycles, and carriers file changes with notice periods4, 3.

Goldman Sachs attributes a large slice of freight to the waterway itself. In a report published on 22 October it counted "a USD 7 per barrel war risk premium for crossing the Strait of Hormuz"3. That sat inside a global average crude freight rate above $20 a barrel, against $3 a year earlier3. Ship-to-ship transfers added $4 a barrel and higher marine fuel prices another $4, the bank said3.

The IEA put the cost of shipping crude from the Middle East Gulf to Asia at more than $37 a barrel by mid-October, over five times pre-war levels7. For a 2 million barrel VLCC, that is more than $74 million a cargo against less than $15 million before the conflict7. Middle East to China tanker earnings surged from $218,000 a day before the war to $1.35 million a day on Thursday, Bloomberg reported8.

Bunker fuel, the fuel ships burn, is still tight. VLSFO in Busan climbed about $100/mt in October to roughly $1,069/mt9. Rotterdam's conventional VLSFO gained $23/mt over the past week10. Singapore VLSFO lead times start at about 13 days, and Singapore residual fuel oil stocks averaged 6% lower in October than in September9, 11.

Some surcharges are already easing. Maersk cut its Emergency Contingency Surcharge from Jebel Ali, Fujairah, Khor Fakkan and Sohar to West Africa from 1 November4. It fell by $500 per container, taking a 20-foot dry box from $3,950 to $3,4504. The carrier said the change remained subject to notice periods and regulatory approvals4.

If the talks fail

Goldman Sachs raised its oil price forecasts on Sunday. It said Brent could reach $140 in 2027 in a scenario where Gulf output runs 3.5 million barrels per day under the 2025 average1.

Physical risk has not fallen. Iran attacked at least 34 commercial vessels in Hormuz and the Gulf in October, the highest monthly number since the war began12. The Pakistan-bound LNG carrier Al Mayeda, loaded with Qatari LNG, was struck on Friday while heading toward Hormuz, despite safe-passage clearance from Tehran hours earlier, people with direct knowledge told Bloomberg6. LNG flows through Hormuz held at about 30% of pre-war levels in October6. Pakistan could be forced into the spot market, where prices are more than three times pre-war levels, Bloomberg reported6.

Supply has partly adapted. About 40% of Gulf crude exports bypassed Hormuz by September, against 17% before the war7. Flows through the strait, including offshore transfers, were about 82% of pre-war levels, according to the report7. Saudi Arabia raised crude exports in October despite Houthi attacks on its energy sites, two of three ship-tracking firms told Reuters1. ADNOC's chief executive said the world has drawn nearly 1 billion barrels from stocks since the war began1.

What to watch this week

  • Washington's formal answer to Tehran's proposal, and whether talks resume after the Iranian team left Doha1, 2.
  • The US midterm result on Tuesday, which traders treat as a variable for escalation1.
  • Whether ship traffic through Hormuz picks up, and any change in the extra insurance costs owners pay for the voyage13, 6.
  • New carrier surcharge notices, and whether other lines follow Maersk's cut4.