Why Crude Oil Prices Hold Above $100 Despite Trump’s Iran Pledge

When President Donald Trump pledged on 8 October 2026 not to strike Iran before the 3 November US midterms, crude oil prices did what you would expect and fell. What they did not do was collapse. Brent stayed above $100 a barrel in most reported snapshots, well above where a simple “risk off” reading would place it.

That gap is the signal worth paying attention to. The pledge removed one immediate escalation scenario, but it left the physical constraints underneath the market untouched: depleted inventories, expensive shipping and a Strait of Hormuz that remains insecure.

A second thread ran alongside it. Washington’s temporary waiver on Russian diesel sanctions drew loud political objections, yet its effect on supply looks far smaller than the noise around it.

Here is how to separate the part of the price that was politics from the part that is physical, so you can judge how far it could realistically fall or rise from here.

Why did crude oil prices ease when Trump ruled out an Iran strike?

The statement itself was brief. Trump said the US would not attack Iran before the midterms, pointed to “productive discussions” with Tehran, and confirmed the blockade of Iranian ports would stay in force, according to CNBC. He also claimed 22 million barrels had moved through Hormuz overnight, none of it to or from Iran.

Traders took the message at face value. The Edge reported on 9 October that Brent slipped below $103 and West Texas Intermediate (WTI), the main US crude benchmark, moved near $90.

Then the qualifications started arriving. AFP reported that while the surge had eased, continuing attacks on shipping through the strait were still lending support to prices.

Lipow Oil Associates’ Andy Lipow warned that continuing Iranian attacks on Hormuz traffic remained a live risk for the market even after the announcement.

The pledge also had a built-in expiry. It covered the pre-election window only and did not rule out military action permanently.

Tracking the move precisely is harder than it should be. Reported prices diverge sharply across outlets, likely reflecting different contracts, settlement timings or intraday snapshots rather than one unified market price.

These should not be read as a one-day swing, and no authoritative weekly settlement for 16 October has been identified. What the pullback tells you is that the market priced out a near-term US-Iran confrontation. It does not tell you supply improved, so a lower headline price is not the same thing as a safer market.

Risk premium versus physical tightness: what is actually holding the floor?

Two different forces sit inside any oil price during a geopolitical scare. One moves fast; the other moves slowly. The slow one explains why prices refused to fall further.

What a risk premium is

A risk premium is the extra amount buyers pay above what current supply and demand alone would justify, because they fear a future disruption. When Trump took a strike off the table before the vote, part of that fear lifted, and that slice of the price came out quickly.

The Hormuz risk premium is rarely a single number; it blends fear of a future outage with the real cost of moving cargoes today, which is why a political pledge can shave one part without touching the other.

The familiar Hormuz-scare pattern works this way: prices jump on a threat, then retreat as tankers keep sailing or diplomacy improves. This time the retreat stalled early.

Why low inventories change the maths

The reason is stock levels. The International Energy Agency (IEA), as reported by Argus on 14 October, put global observed inventories 509 million barrels below pre-war levels at the end of September, with onshore stocks at their lowest since at least 2016. OPEC’s October Monthly Oil Market Report showed OECD commercial stocks at 2.808 billion barrels in August, about 177 million below the 2015-19 average, with product stocks roughly 80 million short.

Inventories act as the market’s shock absorber. When they are thin, even a brief outage has nothing to cushion it, so prices must move further to ration supply.

Flow figures need careful handling:

• The IEA figure tracks reported strait flows.
• Kpler’s number covers crude and products over a specific week.
• Goldman Sachs measures total Gulf exports, including untracked “dark” cargoes, so it is not comparable with either.

Freight costs add another layer. A very large crude carrier (VLCC) charter from the Persian Gulf to China reportedly reached the equivalent of about $24 a barrel. The IEA describes the supply recovery as fragile and expects the market to stay in deficit through the end of 2026.

With stocks this depleted, a short disruption that would once have been absorbed can now move prices sharply. Your downside protection in a calm-looking market is thinner than the headline price suggests.

The Russian diesel waiver: relief for fuel markets or a sanctions headache?

If the Iran pledge was about probability, the diesel waiver was about politics. It arrived with considerable weight attached.

What the licence allows

The US Treasury’s Office of Foreign Assets Control (OFAC) issued General License 135, reported by Politico on 9 October. It permits the sale, delivery and importation of Russian-origin diesel into the US and global markets until 7 April 2027. The reported schedule runs as follows:

1. More than 300,000 tonnes immediately.
2. 500,000 tonnes in November.
3. Up to 1 million tonnes a month thereafter, reportedly until expiry.

CNBC calculated the total at about 4.8 million tonnes, or nearly 36 million barrels. Russia partially eased its own export restrictions to allow 500,000 tonnes abroad from 10 October.

Now set that against the market. Global diesel demand runs at roughly 120 million tonnes a month, according to Foreign Policy analysis, and Kpler data cited by Axios puts the diesel deficit at about 1 million b/d.

Rachel Ziemba and Michelle Brouhard, cited by Axios, assessed the waiver as unlikely to change near-term fundamentals materially, adding that Russia’s capacity to deliver extra volumes is uncertain.

Goldman Sachs expects diesel prices to stay elevated through 2027, and the IEA sees middle-distillate constraints, covering diesel and jet fuel, persisting into that year. An earlier G7 release of 50 million barrels of products made almost no difference to diesel tightness, according to an analyst cited by CNBC.

Why allies and lawmakers object

A bipartisan Senate group, including Mitch McConnell, Thom Tillis and Richard Blumenthal, urged Trump to rescind the deal and called it a “betrayal” of US allies. Chuck Schumer, Jeanne Shaheen and Elizabeth Warren argued it could hand Russia extra revenue for its war in Ukraine. Ukraine, the UK and Germany objected or reaffirmed their support for sanctions.

The administration framed the licence as a way to add supply and ease fuel prices, while critics pointed to its timing weeks before the midterms. Moneycontrol warned on 12 October that it could weaken the wider sanctions architecture if it becomes more than a narrow exception.

For you, the waiver matters less as a supply event than as a signal that US sanctions policy may bend when domestic fuel costs become politically expensive. That should affect how much weight you give sanctions in future supply forecasts.

For readers wanting the licence text itself, our detailed coverage of the diesel waiver sets out how the promised volumes compare with what Treasury actually authorised.

What could push crude oil prices above or below this floor?

The floor is firm, but it is not unbreakable. Each risk below has a specific mechanism you can watch for.

The main bullish threat is escalation that turns a shipping risk into an actual outage. The main bearish threat is a combination: weak demand, restored Gulf output and successful diplomacy arriving together.

Published 2027 Brent forecasts span more than US$30, which shows how heavily the outlook depends on how quickly Gulf supply recovers and inventories rebuild, the same variables that set today’s floor.

Both readings of the premium have evidence behind them. The fading-premium case rests on the pledge and recovering Gulf exports, while the embedded-premium case rests on the blockade, ongoing attacks, freight costs and empty storage.

Key dates to watch:

• 3 November 2026: US midterm elections, when the pledge effectively lapses.
• 7 April 2027: expiry of the Russian diesel waiver.

The post-election window matters most, because the pledge expires in practice once the vote is counted. Treat current calm as conditional rather than settled.

Past performance does not guarantee future results. Financial projections are subject to market conditions and various risk factors, and the forward-looking scenarios above are speculative and subject to change.

What the pullback changes, and what it leaves in place

The political premium has partly faded. The physical one has not: inventories sit hundreds of millions of barrels short, freight remains expensive, Hormuz is still contested, and diesel supply stays tight whatever the waiver delivers.

That leaves two decision points. The weeks after 3 November will show whether the calm outlasts the election, and April 2027 will test whether the diesel exception lapses or becomes policy.

When the next headline lands, ask one question. Does it change the probability of disruption, or does it change physical supply? The first moves prices quickly and fades; the second sets the floor.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions.