22OCT

Brent clears $100 first time since May

2 min read

17:22UTC

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 $93⁠¹. 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 transits⁠².

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 →Black Sea →

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

Read story →

Different Perspectives

Wang Yi

China's foreign minister and Djibouti's issued a joint communique on 21 October saying the war should not reach the Horn of Africa and stressing free navigation through Bab al-Mandeb. The text names neither Iran nor the Houthis, and Djibouti hosts China's only overseas military base, opposite the Yemeni coast.

Ministry of External Affairs

India's foreign ministry called the attacks on Saudi civilian and energy sites "unacceptable" on 22 October and said they must stop at once. An Indian died at Dammam, Indians were injured there and at Shaybah, and about 4,000 Umrah pilgrims remain stranded by one MP's count.

Iraq

Iraq closed the al-Sheeb crossing with Iran to travellers and trucks from 21 October and said other crossings would close gradually. Unlike September's closure, which ended on a staged timetable, this one has none, and Iran's interior ministry said it received no notice.

Abdel Fattah el-Sisi

Egypt's president said on 21 October that Cairo's support would "defend Saudi territory, and does not include an attack on Yemen". Araghchi warned that Egyptian involvement would further complicate the situation, and Cairo's limit matches the one Ankara set on 8 October against attacking another state's soil.

UK Ministry of Defence

The MoD said on 20 October that RAF Typhoons over Saudi Arabia will not strike the Houthis, but extended tanker support to Saudi operations including against Houthi targets in Yemen. The tanker line sets no limit on strikes, so British aircraft may now refuel Saudi jets on bombing runs.

Turkey

Ankara sent the Mecca Joint Defence Agreement to parliament around 20 October, and its published text treats an attack on one party as an attack on all. Article 16 brings it into force only on the last ratification, so the 5 October invocation in Riyadh could not yet bind Turkey.

Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Editorial standards.