The price of the global crude benchmark, Brent, is once again toiling around $100/barrel as its reasons for trading much beyond the psychological 3-digit mark are being eroded. It is so very hard to complete a picture on how many oil tankers are making passage through Hormuz for the data is retrospective rather than live. With the attacks on shipping increased, there is little doubt that the reported return to export volumes from the Middle East to pre-war levels will be adjusted accordingly to the downside, but for now the assumption of more crude getting through has dampened price fervour. The success of Saudi-backed Yemeni forces in retaking lands lost to Houthi rebels, including the oil-important coastal areas along the Bab al-Mandab Strait, is playing a part in keeping the East-West pipeline secure and giving a notion that navigation might just be slightly freer from threat. Staying with the Saudi influence, the Kingdom has unexpectedly cut its official selling price (OSP) for November delivery into Asia. Through a mixture of ship-to-ship (STS) transfers and alternative delivery routes, the OPEC kingpin has increased exports to 6mbpd, the monthly average of 2025, according to Kpler. However, to make this amount of crude more marketable, the cut in OSP is designed to take into account the record freight rates which are now dogging international shipping. According to LSEG data, booking a charter VLCC from the Persian Gulf to China a year ago was $80k/day, as of Friday it was $1.2m/day. Crude buyers need all the help they can get, and prices are thus adjusting.

You'll need good glasses to see through all of this

There remains a feeling within our market, and probably the wider suites to boot, that we are nearing some sort of crisis point; an inflection, or nexus, whatever your favourite lexical expression is to indicate a convergence of events and an eventual outcome. When looking for a perfection in oil price prediction there is nothing finer when a sort of trinity makes itself known. There ought to be a fundamental reason, geopolitical sympathy and aligning technical analysis which, when combined, will give a Eureka insight, well, hypothetically. It seems our target date when we might expect to ponder a meeting of these conditions is the US Mid-Term elections. It is also worth considering the Israeli General Election on the 27th of October, bearing in mind the incumbent Benjamin Netanyahu’s reluctance to discuss anything ‘Gaza’ as requested by Iran in any settlement. The trouble with this, is, as much as any of us want to believe that we are heading for a confluence, the reality is that we are faced with a delta. Our market drivers are now widespread, as yet unseen and often unconsidered and each rivulet spreading into the unknown need be explored for being a breakthrough or indeed a dead end.

War is a villainous bed fellow to be relied upon in giving reliable data or even narrative. Propaganda is as currency in contemporary times, physically so, for its success is able to move markets and thereby adversely cost antagonists on a daily basis. When the US President says the Strait of Hormuz is open, the prices of oil fall making them more tolerable for US customers and reducing Iranian petrodollar income. A reverse shout by Iranian hierarchy acts in the opposite. Donald Trump’s threat to “annihilate” Iran is hollow. Any further strike by US forces into Iranian territory would cause grievous harm to Republican foot soldiers who are about the business of touting a leader who is ‘in touch with the everyday American’. Prices such as $6 and $4/gallon for diesel and gasoline respectively will have ordinary Joes and Jos putting an ‘X’ against a Democratic name quicker than you can say export ban. However, after the 3rd of November, the White House’s risk playbook becomes a lot looser.

Sergei Karaganov, honorary chairman of Russia's Council for Foreign and Defence Policy, as reported by the ‘BBC’, continued to describe Ukraine as a “Nazi regime backed by the West to wage war on the Russian Federation” and that it would use “brute force to eliminate the threat.” This seems to back up the general precept on how Russia is likely to increase its war during the winter months when Ukraine defenders are at their most vulnerable. What will the response be? Well, greater attacks on Russian refineries and a pushback in time of any curing of the lack of refined products which is so concerning in all parts of the globe.

As much as Washington pressure has forced a G7 release of diesel and crude strategic barrels, it is a quick fix to US/European relations that cannot be repeated. Amin Nasser, CEO of Saudi Arabia's state producer, Aramco, gave a stark warning in an interview with ‘Bloomberg’. “Oil stockpiles that cushion the world from supply shocks have become “scarily thin,” while the squeeze on crude is serious, refined fuel prices have risen even more sharply, […] releasing inventory will not fix supply/demand imbalances [and] may take as long as two years for energy-consuming countries to replenish their stockpiles.”

Before the evolution of electronic markets, in open-outcry sessions a shouted ‘bid’ or ‘offer’ was only as good as ‘one’s breath was warm’. Maybe we should apply this rule to any sort of political edict, headline flash or train of thought. It is not as if financial markets are allowing for oil-centric free thinking. Over-stimulation and soaring global debt have found a curious situation in which both stock markets and bond yields are vying for which is accelerating the most. The United States in particular has created a growth monster from loose money and an A.I. phenomenon that escapes superlatives. Stock market valuations are rampant and encourage inflated participation from the likes of algorithmic trading, and as read in ‘Fidelity Market Insights’, to what they call world of unsustainable debt, sky-high property prices and inter-generational tension. Wealth divides, A.I. energy demand and currency movements will have massive influence on oil consumption, but it is too difficult to predict when and how. Post mid-terms? Post Iran war? Post Trump? Will higher crude/refined product prices cause demand destruction?

Markets have always had to work around imperfect information, that is their very nature and reason for being. However, data or events are consumed in some ways as a matter of taste, hence buyers and sellers. Our fraternity is hit with so much verbal turbulence, acts of war, supply outages and returns that it craves a yardstick to which it can measure, which is why the US Mid-Terms are causing horizon gazing. With so many variables and the ability for them to be comprehended in very different manners, we are yet unsure that the US vote result, which has a 3 percent variation in prediction polls, can clear up this current global gloop.

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