StoneX — "What the Midterms Mean for Oil Prices and Hormuz Oil Flows" (Bruno Santos, published 2026-11-13)

Takeaway

The presenter argues that Brent's ~20% November collapse reflects markets pricing a calmer 2027 — higher odds of Washington–Tehran diplomatic alignment and normalized Strait of Hormuz flows — while the physical market remains tight, with low US and global inventories and below-normal Gulf exports. He expects an unstable diplomatic situation and a "turbulent path" for at least the next two months, and stresses that the 2027 normalization is "a hypothesis, not a guarantee."

What the presenter said

• Brent traded near $118 before the US midterms, lost $100 after the elections, and traded below $90 this week — its lowest since August, down about 20% in November. [00:25]
• The decline reflects a higher chance of Washington seeking diplomatic alignment with Tehran, shrinking the geopolitical risk premium and raising expectations for normalized Hormuz flows from next year. [00:50]
• The market is pricing a calmer 2027 with recovering supply, including potential diplomacy with Iran. [00:11]
• US commercial crude stocks sit around 450 million barrels (4% below the five-year average) and the SPR at roughly 280 million barrels (~40% of capacity) — evidence of a tight market. [01:37]
• Globally, inventories are lower than in previous years; Asia is drawing down reserves faster due to its reliance on Persian Gulf barrels. [02:09]
• Low inventories leave little room to absorb new disruptions, and rebuilding stocks requires additional demand and time. [02:31]
• OPEC+ output rose about 2 million bpd in October to around 41 million bpd, led by Saudi Arabia, returning production to 97% of February levels. [03:00]
• The IEA forecasts the market returns to a surplus in Q4, with supply averaging around 105 million bpd, which helps explain some price relief. [03:32]
• Despite that, Persian Gulf exports remain below normal, leaning on more expensive and fragile alternative routes, and tanker attacks in the Strait of Hormuz continue — keeping freight and insurance costs under pressure. [04:02]
• Near term, diplomacy looks unstable: Iran denies negotiating with Washington, and Trump has said the US doesn't need a deal. [04:34]
• From early 2027, greater pressure on Washington to pursue Middle East diplomacy is possible — but he frames this explicitly as a hypothesis, not a guarantee. [05:04]
• In Eastern Europe, stronger support for Ukraine is expected to conflict with US domestic debates over cost of living and energy affordability. [05:18]
• His bottom line: the market has priced a diplomatic future, but the present reality of low inventories, below-normal Gulf exports and tanker attacks points to at least two more months of turbulence. [05:50]

Trade ideas

None stated. The presenter puts forward no directional trade; his view is mixed — short-term turbulence on tight physical fundamentals versus expectations of a calmer, better-supplied 2027.

Levels and data cited

• Brent: traded near $118/bbl before the elections; lost $100 after; traded below $90 this week (lowest since August).
• EIA: US commercial crude stocks close to 450 million barrels; SPR roughly 280 million barrels (~40% of capacity).
• OPEC: OPEC+ October production up ~2 million bpd to ~41 million bpd (97% of February levels).
• IEA: Q4 global market back to surplus, supply averaging ~105 million bpd.

Risks and what would invalidate this

• Unstable diplomatic situation in the Middle East.
• Ongoing tanker attacks in the Strait of Hormuz.
• Higher freight and insurance costs from geopolitical tensions and reliance on alternative shipping routes.
• Low global inventories leaving little buffer against new supply disruptions.
• Eastern Europe uncertainty: Ukraine support levels vs. US domestic energy-affordability politics.

Note the asymmetry he flags: a genuine US–Iran diplomatic break would undermine the tightness story behind his two-month turbulence call, while renewed attacks or a drawdown scare would challenge the priced-in calm of 2027.