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Iran Conflict 2026
24APR

Brent breaks $100 as insurers hold

4 min read
11:11UTC

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
Oil markets and Lloyd's of London
Oil markets and Lloyd's of London
Brent fell to $89.25 on ceasefire probability, not new barrels, with traders voting for Trump's deed over Tehran's denial. Lloyd's has not repriced Hormuz war-risk cover because its trigger requires a UN Security Council resolution or government certification, so tanker insurance costs remain elevated regardless of the spot move.
Pakistan and Qatar mediators
Pakistan and Qatar mediators
Pakistan's Mohsin Naqvi was in Tehran for his second visit in under a week, using the Pakistan-Qatar channel that delivered April's ceasefire after an identical public-denial cycle. The channel carries both civilian and military buy-in from Islamabad, the only configuration Iran's split command cannot dismiss as a partial signal.
India
India
India summoned the US Deputy Chief of Mission after three Indian sailors were killed aboard MT Settebello, the first formal grievance from a major non-belligerent directed at US enforcement. Indian seafarers supply roughly 12 per cent of the global maritime workforce; their presence on third-flag Gulf tankers is structurally inevitable regardless of bilateral diplomacy.
Islamic Revolutionary Guard Corps (IRGC)
Islamic Revolutionary Guard Corps (IRGC)
The IRGC declared Hormuz closed on 11 June while civilian negotiators were on the same mediation channel, then issued no public comment on the MoU framework. Its silence on the framework, rather than any foreign ministry statement, is the operative approval signal; the corps' unilateral Hormuz closure shows it did not treat the diplomatic track as binding on its operations.
Iran foreign ministry (Baghaei)
Iran foreign ministry (Baghaei)
Esmail Baghaei told IRNA that reports of a finalised deal were 'merely speculation' and that Iran had 'not yet made a final decision'. The denial is structurally identical to Iranian foreign ministry statements during the April ceasefire talks, which produced a binding text within 48 hours of the same language.
Trump administration / CENTCOM
Trump administration / CENTCOM
Trump cancelled the third strike day and called the MoU 'very strong' and almost ready to sign, while CENTCOM kept tanker enforcement running in the same 24-hour window. The administration is simultaneously withdrawing the military pressure it claims drove the deal and sustaining the enforcement campaign it is trying to trade away.