Oil market not pricing in peace, but sees no third US-Iran round

November 13, 2026 (MLN): Brent crude is trading around $90 a barrel after a near 25% fall over 10 days, but the drop does not signal that markets expect peace between the US and Iran, with traders instead seeing no immediate risk of a third round of fighting.

Oil is expected to trade significantly lower if the two countries reach a deal, however fragile, leaving the market in limbo between war and peace.

According to a Bloomberg report titled Oil Is Stuck in Limbo With No Iran War But No Peace, the current price looks wrong in either direction.

It is either too low given the risk of the US and Iran escalating the conflict, or too high if Washington and Tehran sign a deal.

Brent near $90 is an oddity that reflects the prevailing stalemate, the report  argued.

Prices climbed in October on speculation that the US would resume bombing Iran, but that move masked a sharp improvement in the underlying supply-demand balance.

Despite near-daily Iranian attacks on tankers, crude exports from the Middle East, excluding Iran, have recovered to over 90% of pre-war levels through both the Strait of Hormuz and bypass routes.

The physical market is showing the same ample supply. Several crude grades now trade at deep discounts to Brent and West Texas Intermediate futures, with Canadian crude below $60 a barrel.

The world is no longer drawing on inventories every week for the first time since the war began, and countries such as India and South Korea have started rebuilding depleted stockpiles.

Refined products remain tighter. Flows from the Persian Gulf are only about 60% of pre-war levels, keeping diesel and jet fuel prices elevated.

Most refineries in the region outside Saudi Arabia have been fully repaired, and a shortage of tankers is the main constraint on exports. About a third of the rise in diesel prices is due to Ukrainian attacks on Russian refineries.

A US-Iran deal could add to supply by allowing Iranian sales to resume, the report said. Iran exported more than 2.5mn barrels per day of crude and refined products before the war, enough to meet the needs of Germany, the EU’s largest consumer. Tehran is now smuggling at best 300,000 barrels per day, mostly by road to Iraq and Pakistan, plus small Caspian Sea shipments that bypass the US Navy blockade.

Freight costs have also been under pressure. Renting a supertanker to carry crude from the region to China recently jumped to $1.4mn per day, from under $100,000 before the war, as ship-to-ship transfers and longer routes were used to move fuel out of the Gulf.

Shipping costs in the Americas and Europe have since fallen sharply, and a deal would extend that decline, while the status quo is unlikely to cause another surge.

West of the Suez Canal, freight rates have dropped sharply from record highs, but east of Suez they remain close to all-time highs, according to the report’s data.

Nine months of war have drained global commercial and strategic inventories by about 1bn barrels, leaving around 7bn barrels available, the report estimated.

It argued that the pace of restocking is probably overstated. China, for example, would likely resume stockpiling only if Brent falls below $70 a barrel, and restocking would set a price floor well under current levels.

No country is expected to rebuild inventories significantly while Brent stays near $100.

The longer the stalemate lasts, the more time Gulf producers have to build bypass routes around Hormuz, though those workarounds are not ready yet.

The UAE hopes to start pumping crude through its second bypass pipeline by April, which would make its exports more sustainable and free up tanker capacity for others in the region.

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