Brent dips as Trump signals there’s more time for diplomacy with Iran

Happy Monday, friends. Tehran has put a two-day reopening of Hormuz on the table and Washington is weighing it against tomorrow’s midterms. Financing is getting harder at the same time, for Iraq and for the frontier AI companies alike.

Brent fell more than 3% to USD 110 this morning and WTI to USD 100.90 after US President Donald Trump signaled more time for diplomacy with Iran, The National reports. Trump said yesterday that “either they’ll make a deal, or we’ll just end it,” and told Benjamin Netanyahu by phone that he wanted to give Tehran more time before further strikes, according to Axios. Marco Rubio said on Saturday that no decision had been taken on renewed strikes and that Washington would prefer a diplomatic outcome.

Iranian Foreign Minister Abbas Araghchi says a proposal agreed with mediators would reopen the strait fully within two days in exchange for lifting the US blockade of Iranian ports, releasing frozen assets and waiving oil sanctions, while adding that Iran has no plans to meet American officials. An Iranian delegation was in Qatar for talks with mediators on Saturday.

Both benchmarks are still up around 15% and 12% on the month at their highest since April, with UKMTO counting 81 projectile attacks in the strait since 6 July and just over 30 in October alone, the most of any month in this war. UBS expects Brent near USD 110 at year-end, citing record freight costs, constrained tanker capacity and recovering Chinese imports.

Iraq’s own numbers now show what the Hormuz closure has done to its finances. The IMF is drawing up its first lending program for Baghdad since 2019 after the government formally requested funding at the fund’s meetings in Bangkok last month, communications director Julie Kozack said. Kozack pointed to structural problems that predate the war, among them a thin non-oil revenue base, alongside the reduced crude revenues since Hormuz closed. The economy is set to contract 16% this year before a 19% rebound in 2027, with a current account deficit of 10.8% of GDP.

Financing is tightening for the frontier AI companies as well. OpenAI is raising USD 20 bn at a USD 1.25 tn valuation, down from USD 30 bn at USD 1.4 tn, the Financial Times reports. Blackstone and a major Anthropic backer are braced for the company to be rated “high junk” after its IPO, below the investment-grade guidance previously expected, the FT reports separately, which would make its plan to spend more than USD 800 bn on computing infrastructure through 2045 a good deal more expensive to fund. It follows the week in which Alphabet lost USD 500 bn of market value over its own AI spending.

On deck for the week ahead: Aramco reports its 3Q results tomorrow, but eyes will also be on the US, where midterm elections are scheduled to take place. Saudi official Waleed ElKhereiji has said there are concerns about a return to all-out war after the midterms. – Salma