This article draws on the Sarnakh-e Iran Report, published by Global Insights Group's Iran Desk on 31 October, and updates its assessment in light of developments since the U.S. midterms.
The U.S. midterms were long seen as a turning point for the war with Iran, since President Donald Trump had held off on a new round of strikes for fear of hurting Republicans at the polls. With the vote now over, that brake has been lifted, but the results were disastrous for his party, with Democrats taking both chambers of Congress and Vice President JD Vance blaming the war for the losses.
Trump has since said he has no immediate plans to strike, and Brent fell from about $115 a barrel at the end of October to around $94 by 12 November, as markets read the defeat as a turn towards de-escalation.
That re-pricing reflects a bet that escalation is not imminent rather than a significant chance that the war is ending, which would put Brent well below $90, but it still underestimates how long the Hormuz disruption could last and how much worse it could get. Tehran is playing for time in the hope that an anti-war Democratic president takes office in January 2029, while Washington is betting that economic pressure and recovering Gulf flows spare it from conceding anything Tehran could present as a victory.
As a result, both believe time is on their side, which not only weakens any incentive to negotiate seriously but also sustains a volatile status quo that could spiral at any moment. The past ten days, from Qatar’s busy but unproductive mediation to renewed U.S. strikes on southern Iran, suggest that logic still holds.
The market has misread the pause
The sell-off prices the absence of an immediate strike, not how long the disruption could last or how far it could escalate. Gulf crude crossing the strait has recovered to about 70-80% of its pre-war level, but it moves through shuttles, ship-to-ship transfers and U.S. escorts that cost about five times as much as before the war. Only about 24 vessels a day crossed the strait in October, according to S&P Global data, against roughly 125 before the war, leaving LNG and refined products largely shut in.
Gulf crude outflows have rebounded partly because Gulf states have agreed to absorb the risk themselves, shuttling crude through the strait on their own tankers, offering record discounts and even selling on a delivered basis to keep buyers on board. Markets have learned to treat this resilience as permanent, overlooking how much less tolerant Tehran has grown of vessels using the ‘unauthorised’ southern route through the Strait of Hormuz.
Iranian attacks on shipping more than doubled in October from September, and the pace has held into November, with UKMTO recording 12 incidents so far this month while the IRGC has reported at least 20 vessels catching fire, attributing most of them to mines.
Despite increased attacks, crude flows through the strait have so far held up, averaging around 11m bpd in October, only slightly below September, but Iran’s attacks increasingly aim to disable ships rather than simply hit them, and nothing guarantees flows will hold.
Each month of disruption also drains buffers that are already thin, with about 3bn barrels of supply lost since late February and inventories at a decade low, according to Aramco chief executive Amin Nasser. A new escalation would hit a market with less cushion than the one that priced Brent at $115, so today’s cheaper barrel widens the gap between what is priced and what remains a high likelihood of war.
Why there is no settlement
Diplomacy has been busy, driven more by the urgency of keeping the war from reigniting than by any change in behaviour from the antagonists, which makes its lack of progress more telling. Qatari mediators made repeated trips between Doha and Tehran before the midterms, and Iran engaged with them while maintaining its take-it-or-leave-it approach.
Despite Trump’s insistence that talks are going well, they remain stuck on sequencing, with each capital expecting the other to move first. Washington wants quick Iranian nuclear concessions without offering much economic relief in return, while Tehran wants seven prior steps, chief among them lifting the U.S. naval blockade, easing sanctions and freeing Iranian funds, before it reopens the Strait of Hormuz and enters nuclear talks.
Tehran’s only gesture has been to cut its timeline for reopening the strait from seven days to two once Washington acts, a largely cosmetic concession given how long the steps it demands would take to implement.
