17AUG

Brent clears $100 first time since May

2 min read

15:37UTC

Brent settled near $101 on 23 July, its first close above $100 since May, yet southern Red Sea war-risk premiums at 0.75% of hull value still sit far below the 5% Hormuz band.

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Key takeaway

War-risk cover reprices on losses, so watch the next re-mark after the Encelia and Layla strikes.

Brent crude traded through $100 a barrel for the first time since 26 May, settling near $101 on 23 July after an 8% single-session jump, with WTI around $92 to $93 ¹. Brent is the international seaborne benchmark; WTI, its US counterpart, is delivered inland at Cushing, Oklahoma, and carries less chokepoint exposure. The move was a fifth consecutive up-day and left Brent roughly 38% higher month-to-date. Red Sea war-risk cover tells a cooler story. Hull premiums for southern Red Sea transits rose 150% to about 0.75% of hull value after the 20 July blockade, still a fraction of the roughly 5% band underwriters now charge for Strait of Hormuz transits ².

Underwriters reset on evidence of loss, not on a blockade declaration. As of 19 July no merchant ship had been hit in the southern Red Sea, so the premium sat low. The 23 July strikes on the Encelia and Layla are the first realised losses in the basin, and the next re-mark will show whether Bab el-Mandeb closes toward the Hormuz number or holds well below it.

The gap between a $101 flat price and a 0.75% war-risk loading matters for anyone pricing a Med-delivered cargo. The freight and insurance legs carry the physical chokepoint story; the flat price carries the headline. When the two diverge this far, the delivered-cost read sits with the underwriters, not with the screen.

Deep Analysis

In plain English

Brent crude is the main international price benchmark for oil; when people say 'the oil price', they usually mean Brent. It settled near $101 a barrel on 23 July, the first time it has closed above $100 since 26 May. War-risk insurance is a separate cost shipowners pay to cover their vessel against attack in a dangerous area, priced as a percentage of the ship's value. The Red Sea premium jumped 150% but is still far below the roughly 5% charged for the Strait of Hormuz, because insurers only raise prices once they have seen actual attacks in a given area rather than warnings alone. That gap matters because it shows the oil price reacting faster to overall danger than the insurance market is reacting to the Red Sea specifically. Insurance costs will likely keep climbing if strikes on Saudi-linked tankers continue.

Deep Analysis

Root Causes

War-risk hull premiums are set by a small syndicate market centred in London and Scandinavia that prices on realised loss history within a defined geographic box, not on political risk assessments. The Red Sea box has recorded fewer confirmed hull losses than the Hormuz box accumulated over the preceding weeks of strikes, which is the direct mechanical reason its premium still sits at roughly a seventh of the Hormuz level.

Brent's move through $100 draws on both boxes simultaneously: the futures market prices aggregate supply risk across the whole Gulf-Red Sea theatre, while hull insurance prices each chokepoint separately, so the benchmark can outrun the insurance market's slower, evidence-based repricing.

What could happen next?

Precedent
If Red Sea war-risk premiums converge toward the Hormuz band, insurance costs alone could add several dollars a barrel to Mediterranean-bound cargoes independent of any further crude price move.

Source Landscape

This story draws on mixed-leaning sources from India

India

LeftRight

Primary parallel: During the 2019 Strait of Hormuz tanker seizures, war-risk premiums took roughly six weeks of repeated incidents to climb from under 1% to the 3-5% range that eventually held; underwriters priced in stages rather than on the first attack.

Counter-parallel: The 2022 invasion of Ukraine moved Black Sea war-risk premiums to double digits within days of the first strikes on merchant shipping, showing staged repricing is not universal and depends on how quickly underwriters judge a campaign to be sustained rather than episodic.

Consensus view: The Oxford Institute for Energy Studies has argued that war-risk premiums lag headline threat levels because underwriters reprice hull cover on realised losses, not on declared threats, which is why the southern Red Sea rate sits at 0.75% against Hormuz's roughly 5% even as Brent clears $100.

Counter-view: Energy Aspects contends the lag is mechanical and temporary rather than a judgment about relative risk, since Lloyd's-linked war-risk syndicates typically need two to three confirmed incidents in a new zone before repricing to match an established one.

Key tension: Whether the Red Sea premium converges toward the Hormuz band as strikes accumulate, or whether underwriters keep treating the two straits as structurally distinct risk pools.

Sources:TradingEconomics·Business Standard

Mentions:Dated Brent →Strait of Hormuz →Encelia →Layla →Energy Aspects →Red Sea →Ukraine →Bab al-Mandeb →West Texas Intermediate →

First Reported In

Update #19 · Second chokepoint doubles Med freight

TradingEconomics· 23 Jul 2026

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Causes and effects

This Event

Brent clears $100 first time since May

Brent's flat price has finally converged to the freight and insurance signals, yet Red Sea war-risk cover still lags the Hormuz band by a wide margin.

Led to

Brent gives back its $100 handle

Brent's slide back below $100 reverses the first close above that level recorded on 23 July.

Occurred 26 Jul 2026

Read story →

Brent sheds 4.88% on called-off strike

The premium now unwinding was built on Brent's first close above $100 on 23 July

Occurred 3 Aug 2026

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Different Perspectives

Shipping and insurance underwriters

Kpler counted five Hormuz transits on 16 August against 31 the previous weekend, while Windward logged four vessels going AIS-dark for up to a month; underwriters price both the attacks and a sanctions register that names their counterparties in unreadable scanned images. Two trackers now measure only the ships that consent to be seen.

China

China sits at the end of the payment chain the 14 August designation targets: Iran's shadow banking network exists to convert sanctioned oil sales, much of it to Chinese refiners, into usable funds. Beijing has previously refused to recognise OFAC's jurisdiction over its own entities buying Iranian crude, leaving this designation to test compliance rather than change trade.

Qatar

Qatar's foreign ministry denied on 16 August holding any Iranian pilots alive, contradicting Iranian General Mohammad Bagherzadeh's claim that Doha holds three Su-24 aircrew, and said it had recovered only one set of remains. Qatar carries Iran's messages to Washington, and this is a public break with Tehran over a fact only one aircrew inquiry can settle.

Oman

Oman's shipping-map talks, covering monitoring, environment and maritime services, were publicly decoupled from any Hormuz reopening by Iran's own foreign minister on 17 August. Muscat's mediation channel keeps functioning on the narrow file it was given, while the political decision it hoped to unlock stays with Iran's security council.

Saudi Arabia

Saudi Arabia separately called the recurrence of tanker attacks on Emirati shipping a dangerous escalation, breaking from the UAE's repeated formula. Riyadh speaking in its own name over an attack on another state's vessels signals it reads the pattern differently from Abu Dhabi's flat statements.

United Arab Emirates

The UAE foreign ministry condemned a third ADNOC-linked tanker attack on 15 August in language identical, word for word, to its statement the day before. Three consecutive strikes on Emirati shipping have not moved Abu Dhabi's public wording by a single adjective.