US-Iran Ceasefire Deadlock Persists, Oil Prices Rally as Brent Hits $106
nashnova research
Trump rejected Iran's seven-day ceasefire proposal, and Brent crude rose for a second straight day to $106.72/bbl. The global market still faces a 1–2 million barrel/day shortfall — the pace of Middle East supply recovery will set oil's next move.
What broke down in the talks?
Iran proposed a seven-day ceasefire: reopen the Strait of Hormuz, restart nuclear talks — in exchange for the U.S. lifting its blockade on Iranian ports.
Trump rejected the plan. Iran's foreign minister Araghchi confirmed the proposal was relayed via Qatar and that Tehran is awaiting a formal U.S. response.
This means → The strait stays closed for now, and the risk premium baked into oil prices — the extra cost driven by war and blockade — is not going away yet.
How much did oil rise, and why is it still climbing?
Brent November futures rose 1.4% to $106.72/bbl; WTI gained 1.4% to $93.91/bbl — the second consecutive session of gains.
Sally Auld, chief economist at National Australia Bank, said the two sides remain far apart and a near-term deal looks unlikely.
In plain terms = As long as talks stall, markets assume the supply gap persists — and that keeps upward pressure on prices.
How far has Middle East export capacity recovered?
Saudi Arabia's East-West pipeline, damaged by a drone strike on September 10, is now repaired. Loadings at Yanbu port have recovered to about 3.5 million bbl/day, still below the pre-attack level of roughly 4 million bbl/day.
Persian Gulf shipments are also rising: Ras Tanura loadings climbed from about 1.5 million bbl/day in early September to roughly 6.5 million bbl/day.
Combined exports from Saudi Arabia, the UAE, and Iraq have reached nearly 13 million bbl/day — the highest since the war began on February 28, roughly 80% of pre-war levels.
This means → Exports are recovering, but they are still 20% short of where they were — the gap is not closed.
How large is the global shortfall?
Kpler upstream analyst Johannes Rauball said the global market is currently running a deficit of roughly 1–2 million bbl/day.
The shortage is especially acute in medium-sour crude — the Middle East's main export grade — and refiners have turned to Latin America and other regions for substitutes.
In plain terms = The Middle East has clawed back some output, but the world still needs over a million barrels a day more than it is getting — that is the root of the price pressure.
What are the knock-on effects of rerouted shipping?
Rerouting Saudi crude through less efficient Persian Gulf lanes requires roughly twice the normal number of vessels. VLCC and dirty-tanker freight rates have hit record highs.
Hamad Hussain, senior economist at Capital Economics, said the key question is whether Saudi Arabia can keep both Yanbu and Persian Gulf terminals running at high volume simultaneously — if so, total exports could exceed pre-attack levels.
Kpler expects that even if the Strait of Hormuz eventually reopens, the process will be gradual and uneven, and freight-market tightness is unlikely to ease quickly.
What should markets watch next?
VT Markets senior analyst Mahmoud Mashal said meaningful progress in negotiations is the core test for whether the risk premium in oil can unwind.
Renewed tensions between Saudi Arabia and Houthi forces keep concerns about energy infrastructure security alive.
This reflects a deeper reality: oil prices are no longer driven by supply-and-demand numbers alone — geopolitical talks and infrastructure safety are now the pricing anchors.
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