Oil Drops Below $100 as Hormuz Flows Recover

Oil fell below $100, heading for its longest run of declines since June, as robust flows through the Strait of Hormuz and diplomacy around the war weighed on prices¹. Brent fell 3.4% to settle near $100 a barrel as Saudi Arabia increased crude shipments through the strait². Crude retreated as the improved flows eased supply concerns, helped by hopes that diplomacy will end the conflict³. Prices fell more than 3% on Monday as tanker traffic and energy flows recovered⁴.

Aramco has increased exports through the Strait of Hormuz after attacks on its East-West Pipeline forced it to halt some shipments through Yanbu¹⁰. Oil exports through the strait are gradually recovering, with ship-to-ship transfers, rarely used before the war, now keeping cargoes moving⁵. Pakistan has secured safe passage through Hormuz for a second Qatari LNG cargo this month, easing pressure on its strained energy position¹³.

The risk has not gone away

The waterway remains dangerous. The British military said an unknown projectile struck a tanker as it entered the Strait of Hormuz on Monday, injuring two crew members⁶. The United Kingdom Maritime Trade Operations centre reported that an LPG tanker was struck by debris from unknown projectiles while transiting outbound from the strait⁷. Vessels there have come under repeated fire since the conflict began⁴.

US Vice President JD Vance said substantial volumes of oil and gas continue to pass through the strait despite the disruption he described⁹. The cost of that continuity is rising. A shortage of oil tankers and record shipping rates through Hormuz could offset falling crude prices and keep pump prices high⁸. Reuters makes the same point from the other direction: the shuttle system keeping oil flowing does so at a high cost⁵.

What to watch

Equity markets took the fall in crude as relief. London stocks posted solid gains as oil retreated to $100¹¹. Lower oil prices matter for markets because energy costs influence inflation, corporate margins and consumer spending, and a decline in crude feeds through all three¹².

Prices firmed again in early trade ahead of potential US-Iran talks¹⁰. Two variables now set the direction, and neither is yet priced with confidence: whether the diplomacy produces an agreement that reopens the strait properly^1,3, and whether tanker capacity and freight rates normalise, since those rates can keep refined product expensive even as the crude benchmark falls^5,8.