Brent Briefly Falls Below $90 as Peace Hopes Weigh on Oil

ICE Brent extended its steep decline after the Trump administration reiterated its reluctance to launch new military strikes against Iran. US-brokered Russia-Ukraine peace talks were also under way in Abu Dhabi, adding to market expectations that the two conflicts could move toward an end.

Shipping costs point to continuing concern over Gulf risks. A very large crude carrier (VLCC) sailing from the Persian Gulf to China is currently being chartered for about $72 million to $74 million, or $36 to $37 per barrel. Those rates have dipped only marginally over the past two weeks. By comparison, VLCC rates just outside the Strait of Hormuz, in the US-controlled Gulf of Oman, are about $20 per barrel lower.

Freight rates on other routes have fallen more sharply. A US-to-China voyage now costs about $45 million, or $22.50 per barrel—$35 million less than a month ago. Iranian drones and missiles have struck at least 16 tankers in the Strait of Hormuz so far this month, though the UK Maritime Trade Operations (UKMTO) reported 11 attacks.

Elsewhere in the market, China’s crude imports rose to a seven-month high of 42 million tonnes, or 9.9 million barrels a day, in October. Volumes were still 13% below a year earlier, while Saudi and Iraqi shipments recovered as refining margins improved and product stocks remained low. US gasoline prices fell below $4 a gallon for the first time since July, but remained 19% above seasonal norms; diesel averaged $6.15 a gallon.