Skip to content
You can now search across every topic, entity and event.What's new
Iran Conflict 2026
23AUG

Brent breaks $100 as insurers hold

4 min read
19:02UTC

Brent crude fell 5% below $100 on Monday on ceasefire hopes, but Lloyd's left its Hormuz war-risk designation untouched. Cheaper oil on the screens; unchanged cost to move a tanker.

ConflictDeveloping
Key takeaway

Falling oil reflects deal-hope; flat insurance reflects deal-doubt, and insurance pays out when ships burn.

Brent Crude fell roughly 5% on Monday 25 May to about $98.96, dipping to $98.12 intraday, its first sub-$100 print since early May and a fall of some $13 from the $112.10 conflict high reached on 19 May 1. West Texas Intermediate (WTI), the US benchmark, slid toward $92 in the same session. Oil traders read the day as a ceasefire drawing near.

The insurance market read it the other way. Lloyd's of London, the centuries-old London marine market that sets war-risk cover for shipping, left its Strait of Hormuz designation in place, with premiums stuck at $10-14m a voyage. A fall in crude that holds would, in time, ease pump and freight costs the war pushed up. Nothing in the cargo lanes has changed yet, and the cost of moving a tanker through the strait has not moved with the screens.

The two markets diverge because they answer different questions. Oil futures clear daily on sentiment, and Goldman Sachs and Morgan Stanley flagged the structural insurance premium beneath this split in mid-May . War-risk underwriters price the probability of a hull loss, not the probability of a press release, so the Lloyd's Joint War Committee will not relist Hormuz on a verbal understanding. At $99, Brent sits about $7 below the International Energy Agency (IEA) $106 Hormuz-closure baseline, the level the agency models for a shut strait, implying the futures market has now priced a substantial chance the strait reopens soon.

Traders should treat the move with some caution. A 5% drop on a thin US holiday session, the biggest single-day fall since the post-ceasefire relief on 22 April , can be ordinary profit-taking as much as a verdict on the talks. One session reads as the weaker signal next to the Brent-Lloyd's split, which is the durable one, because insurance is the market that pays out when ships burn, and it has not flinched.

Deep Analysis

In plain English

Oil prices fell below $100 a barrel on Monday for the first time in weeks. Markets were pricing in optimism that a deal might end the war in the Persian Gulf and reopen the Strait of Hormuz, the narrow passage through which about 20% of the world's oil travels. But Lloyd's of London, which insures the ships that carry that oil, kept its war-risk rates unchanged at $10-14 million per voyage. Insurance markets move more slowly than financial markets, because insurers face real losses if they get it wrong. The gap between the two tells you something: traders are betting on a deal, but the people who actually have to pay out if a tanker is hit are not yet convinced.

Deep Analysis
Root Causes

Lloyd's war-risk designation at Hormuz depends on the Joint War Committee's (JWC) listed-area classification, which requires a formal resolution before removal. The JWC's protocol requires either a UN Security Council resolution certifying the end of hostilities, or a bilateral government certification letter, before an area can be de-listed.

UNSC Resolution 2817 condemned but did not certify anything; no bilateral letter from the US or Iran has been deposited with Lloyd's. Until one of those instruments lands, syndicates cannot underwrite at standard rates without breaching their reinsurance treaty terms.

The futures market, by contrast, trades probability. Brent's 5% fall represents the market pricing roughly a 35-45% probability of a near-term deal, per Goldman's 25 May note, not a resolved outcome. The two markets answer different questions, which is why they can diverge by $13 simultaneously.

Escalation

Directionally de-escalatory on futures markets, but structurally unchanged on physical shipping. The Lloyd's hold is the more reliable indicator of near-term kinetic risk.

What could happen next?
  • Risk

    If deal talks break down after Brent has already priced a 35-45% deal probability, a sharp reversal toward $112 or beyond is the immediate market consequence.

    Immediate · Assessed
  • Consequence

    Lloyd's war-risk designation will remain in force until a signed, deposited instrument reaches the Joint War Committee, regardless of what verbal agreements are announced.

    Short term · Assessed
  • Opportunity

    Asian refiners holding spot-market capacity could lock in sub-$100 Brent cargoes at today's price on a 30-day delivery basis if they judge deal probability above 50%.

    Immediate · Suggested
First Reported In

Update #107 · Two markets, two prices on one Iran deal

Fortune· 25 May 2026
Read original
Different Perspectives
Hizballah
Hizballah
Has not commented on the US Treasury's 20 August designation of ten people, including named couriers, over a cash network Treasury says moved money to it from the IRGC-Qods Force. ACLED recorded a sharp rise in attacks around it the same day.
Kuwait
Kuwait
Kuwait's Chief of the General Staff, Lieutenant General Khaled al-Shriaan, co-chaired the 16th US-Kuwait Joint Military Commission at the Pentagon on 21 August. Kuwait has not published what was agreed; only a summary of the meeting's existence and attendees is sourced.
Qatar
Qatar
Has not commented publicly on the $4.5bn KC-46A tanker Foreign Military Sale notification the State Department approved on 20 August. The notification opens a sale process; Doha has not confirmed whether it will proceed to a signed transfer.
Mohammad Bagher Ghalibaf
Mohammad Bagher Ghalibaf
Told a Baghdad business meeting on 20 August that Iran will not endure a hungry population regardless of its military strength, against 87.9% point-to-point inflation and 128.1% food inflation for Tir. His fellow Majlis Economic Committee member Samsami separately warned a petrol price rise would ignite unrest.
US Navy
US Navy
Signed a $22.9bn, seven-year contract with Raytheon on 17 August to raise Tomahawk output from about 60 a year to more than 1,000. The Acting Navy Secretary, quoted via an X post, framed it as the "Arsenal of Freedom" initiative; it replaces the 850 missiles fired by 1 April in about ten months at the new rate.
UK Maritime Trade Operations
UK Maritime Trade Operations
UKMTO logged six armed men boarding a tanker 136 nautical miles east of Al Mukalla on 20 August and redirecting it toward Somalia. A vessel steered toward the Somali coast reads as an attempted seizure, a distinct hazard from the stand-off strikes the same lane has seen before.