Skip to content
Welcome, thoughtbot's Giant Robots listeners!Start here
Russia-Ukraine War 2026
12OCT

Brent jumps 7%, rial hits record low

2 min read
10:59UTC

Brent crude spiked almost 7% intraday to $97.47 on 1 June after Iran suspended talks, settling at $94.98; the rial hit a record 1,746,000 to the dollar as Lloyd's held its Hormuz war-risk line.

ConflictDeveloping
Key takeaway

Oil and the rial both moved on Iran's walkout, yet Lloyd's kept Hormuz war-risk locked.

Brent Crude, the global oil benchmark, spiked almost 7% intraday to $97.47 on Monday 1 June once Iran suspended talks, its highest since the $98.83 Bandar Abbas bounce on 26 May, yet it settled lower at $94.98, up 4.2% on the day, as the Lebanon ceasefire pared the gain⁠1. The jump came on a formal Iranian diplomatic act, not a missile, so the risk premium now tracks the negotiating table rather than the battlefield. A 7% move translates to roughly 12 to 15p a litre for UK drivers within a fortnight.

The Iranian rial hit a record 1,746,000 to the dollar on Iran's open market by 2 June, from 1,705,000 on 31 May, a 2.4% depreciation in two days that accelerated after the suspension⁠2. Imported food, medicine and fuel cost more in rial overnight, and for Iranians on fixed wages savings erode in days. The same Iranian act split the two markets: Brent rallied while the rial fell, because traders read deal-breakdown risk where ordinary Iranians read a worsening economy.

Lloyd's of London kept its Hormuz war-risk designation unchanged, holding the two-market split that has run since the conflict began. Lloyd's Joint War Committee can de-list the strait of Hormuz only on a UN Security Council resolution or a government certification letter, a structural trigger no sentiment can shift; futures, by contrast, price the odds of a press release. So crude can rally on a thaw while marine insurance stays frozen, because the two answer to different triggers.

Deep Analysis

In plain English

Two different markets were tracking the same conflict on 1 June and reached opposite conclusions. The oil futures market, where traders bet on the price of crude oil, drove Brent Crude up by nearly 7% when Iran suspended talks, then back down when the Lebanon ceasefire was announced, ending the day 4.2% higher. Oil futures respond to headlines within minutes because traders can buy or sell in seconds. Lloyd's of London, founded in London in 1688, runs the specialist market that insures ships against war damage. It left its high-cost 'war-risk' designation on the strait of Hormuz unchanged, as it has throughout the conflict. Lloyd's cannot de-list Hormuz just because a ceasefire looks possible; it needs a formal UN Security Council resolution or a government certification letter. None has arrived. The result is that oil traders think the risk is easing while the insurers who cover the actual ships think nothing has changed. The Iranian rial (Iran's currency) fell to a record low of 1,746,000 per dollar on Iran's open market by 2 June. That means ordinary Iranians buying imported food, medicine or electronics face rapidly rising prices, regardless of what diplomats are negotiating.

Deep Analysis
Root Causes

The Lloyd's/futures split has a specific institutional cause: Lloyd's Joint War Committee operates on the basis of 'listed areas' that require a formal government certification process to de-list. That process requires either a UN Security Council resolution certifying the end of hostilities, or a letter from a government with jurisdiction over the area.

Neither the US government, which runs the blockade, nor Iran, which controls the strait, has issued such a letter. With Russia and China vetoing any UNSC resolution, the bureaucratic unlock is structurally blocked for the duration of the conflict. This is not risk-model inertia; it is a deliberate institutional design that was built after the 1988 Tanker War specifically to prevent Lloyd's from being repriced by political headlines rather than verified security conditions.

First Reported In

Update #115 · Iran moves first, Trump moves by phone

CBS News· 2 Jun 2026
Read original →
Different Perspectives
Government of Latvia
Government of Latvia
Latvia abstained on 22 September when the EU renewed its individual sanctions for 36 months at the price of delisting Alisher Usmanov and Mikhail Fridman, and promised national sanctions of its own. Riga's abstention marks how far a frontline member state will go to keep listed names listed.
India's Ministry of External Affairs
India's Ministry of External Affairs
After the House passed the Graham bill on 16 September, India's foreign ministry said it would keep buying energy on market terms and protect its trade. Russia supplied 30.3% of India's crude imports in fiscal 2026, so the tariff decision due around 18 October falls directly on New Delhi.
Kaja Kallas, EU foreign policy chief
Kaja Kallas, EU foreign policy chief
Kallas answered the US licence on 10 October by saying Europe would not ease pressure, and EU ministers adopted a 22nd package of nearly 1,600 listings two days later. Brussels is tightening as Washington loosens, though TASS reported the package adds no significant new trade restrictions.
Donald Trump and the US Treasury
Donald Trump and the US Treasury
The Treasury licensed Russian diesel imports until 7 April 2027 on the day of Trump's call with Putin, and Trump then told reporters Ukraine should find a new leader. Washington is trading sanctions relief for fuel supply while pressing Kyiv to halt the refinery strikes behind the shortage.
Kremlin and Deputy Prime Minister Alexander Novak
Kremlin and Deputy Prime Minister Alexander Novak
After the 9 October call the Kremlin said Russia was ready to supply oil and petroleum products to American and global markets, and Novak brought forward the end of diesel export curbs. Moscow is selling the shortage back as goodwill, with volumes that Decree No. 686 now hides from outside checks.
Volodymyr Zelenskyy, President of Ukraine
Volodymyr Zelenskyy, President of Ukraine
Zelenskyy called GL 135 an investment in prolonging the war and offered to stop striking Russian refineries if Russia stops destroying Ukraine's energy system. Answering Trump's call for a new leader, he set a total 60-day ceasefire as the condition for elections, which puts the next move on Moscow.