September in one page
Bottom line
- The conflict's supply risk remains: crude moving through Hormuz is supported by a naval arrangement, not secured by a settlement.
- Europe continues to bear the cost mainly through energy. Crude flows have recovered, but LNG and refined fuels remain restricted; these marginal supplies continue to influence the gas and diesel prices Europe pays.
- Investors pay through interest rates: the ECB tied its rise to the conflict, and borrowing costs rose in euros and, more steeply, in dollars.
- The US–Iran bargaining has narrowed to who moves first: Iran wants sanctions relief before conceding, while renewed US bombing is reported to be expected after the November midterms.
What it means
The oil price has stayed high mainly because the crude came back through routes that are costly, slow and exposed to attack, while the stocks drawn down over seven months of lost supply have not been rebuilt.
The routes are costly because both sides of the conflict shape them.
Markets over the month
Brent crude+14.4%
US 10Y yield+51 bp → 5.26%
Euro-area 10Y+27 bp → 3.61%
US high yield+45 bp → 308 bp
Dollar index+2.0%
EUR/USD−2.1% → $1.1355
Gold−6.6%
Euro Stoxx 50−2.4%
S&P 500−0.5%
From the market table in the full newsletter: change over the month, yields and the spread to 29 September, the rest to 30 September.
What we watch to early November
- The base case to early November is that crude keeps moving, attacks keep shipping costs high, and the oil price stays well above its level at the start of September.
- The alternative, a phased US–Iran agreement before the elections, would be expected to lower shipping costs and the oil price with them.
Read the full newsletter →The full newsletter covers what happened this month, the analysis, the historical parallel, what it means for investors and businesses, and the market table.