Both exit gates under pressure as markets price a lasting disruption

The diplomatic door closed and prices came back

On 26 September Trump rejected Iran's roadmap to reopen Hormuz within 7 days. According to Al Jazeera, the plan rested on 4 conditions. They were lifting the naval blockade, a waiver from oil sanctions, the release of about 12 billion dollars in frozen assets, and a ceasefire covering Lebanon and Yemen. The market priced the rejection on the first trading day. According to Trading Economics, Brent futures topped $106 in Asian trading on 28 September and traded at $105.84, up $1.52. The price has risen 16.96% in a month and 57.76% in a year.

The two capitals' calendars are also diverging. According to CBS News, Trump said on 27 September that he expected talks to resume this week. The same day, according to The Times of Israel, the Iranian delegation said no new round was planned for this week. CBS also reported that Trump did not rule out a new military strike before the November midterms. With no agreement even on the calendar, there was no concrete basis as of 28 September for the market to price an early reopening.

The second gate is also in the crosshairs

The only major outlet that bypasses Hormuz is Saudi Arabia's East–West pipeline and its Red Sea terminus at Yanbu. The line can carry up to 7 million barrels a day. According to a GlobalSecurity summary of 24 September, the line resumed operation at low throughput on 22 September, and Aramco is trying to raise throughput to about 4 million barrels a day. Two days later, on 24 September, the Houthis fired 6 ballistic missiles at Yanbu and Taif; the coalition said it intercepted all of them, and damage could not be verified.

The pressure has spread to Riyadh. According to The National, the coalition shot down 2 Houthi drones heading for the Riyadh area on 26 September. Schools in Riyadh moved to remote learning from 27 September to 1 October; no official reason was given, and it could not be verified that the decision covers the whole city. The Houthis declared a naval blockade in July. According to Al Jazeera, Bab el-Mandeb, the southern mouth of the Red Sea, carries about 12% of global oil trade. In other words, both exit gates came under pressure within the same week.

What the spread is saying

The clearest indicator of whether the disruption is priced as temporary or lasting is the spread between Brent and WTI. WTI measures oil in the US domestic market, while Brent measures seaborne global oil. According to Investing.com data, the spread widened from $7.97 on 21 September to $11.91 on 25 September. In the same week WTI fell back to $92.41 while Brent held at $104.32. According to DTN, front-month WTI fell 7.5% on the week, while Brent rose by less than 1%.

This picture shows that seaborne risk remains a separate premium in Brent. However, we did not collect dated data for the whole futures curve, so the gap between the front end and the far months could not be verified. In our report of 23 September we tied the $105 threshold solely to the Hormuz negotiations. The threshold was breached the next day, but the cause was the attack on Yanbu. For that reason, every price threshold in this report is written together with the channel that carries it. Above $106 is this time the product of the diplomatic rejection; above $108 belongs to the Red Sea channel.

The Hormuz count is at the floor

Visible traffic through the strait offers no sign of a reopening. According to data sourced from Reuters, 9 commodity ships passed on 24 September, against a 10-day average of 18. The pre-war baseline was about 125 ships a day. On 26 September Trump said 29 ships had left overnight; this claim could not be verified by independent tracking data. According to Global Energy Flow, estimates of crude flows diverge sharply. Tankertrackers puts the figure at 3.7 million barrels a day, while a number derived from a CENTCOM statement reaches about 16.4 million. The gap is more than fourfold.

Transmission to Türkiye

For Türkiye the first channel is the pump price. According to Sanayi Gazetesi, diesel cost 93.50 lira on Istanbul's European side on 28 September. According to Gzt, the sliding-scale mechanism, which adjusts fuel taxes to the oil price, ends on 1 October, and the stepped ÖTV on diesel will rise from 3 to 6 lira per litre. If Brent stays above $105, this tax step and the product price will land in the same week.

The second channel is the external balance. According to the Ministry of Trade, imports rose 10.5% to 28.7 billion dollars in August, and the trade deficit was 5.24 billion dollars. According to data cited by Borsa Gündem, the export-to-import coverage ratio was 81.8%, or 98.8% excluding energy. The difference shows that the energy bill is the main source of the deficit. That navigation security in Hormuz and Bab el-Mandeb is on the agenda of Fidan's visit to the UAE on 28 September shows Ankara is watching both gates in terms of its own bill.

What to watch

There are three indicators for the next 7 days. The first is whether Washington and Tehran announce a written date for talks this week; as of 27 September the two sides are reading different calendars. The second is whether the Brent–WTI spread narrows from $11.91 on 25 September to below $10; if the spread closes, the seaborne premium is unwinding. The third is confirmation of damage at Yanbu and whether the East–West pipeline reaches its target of 4 million barrels a day. If the first indicator fails to materialise and the third turns negative, both gates can be considered closed, and the $108 threshold comes back into play.