Key Highlights

  • The November Brent contract was at $107.35 at 08:00 GMT, which is early afternoon in India.
  • Separately, Reports said that the White House is weighing relief involving red-dyed diesel, though details were not spelled out.
  • Wednesday's PCE Inflation report and Friday's jobs report will show whether oil's strength is feeding into broader price pressures.
  • Only 132 transits passed through the Strait of Hormuz from September 21 to 27, far below normal traffic.

Brent crude surged toward $108 a barrel in Asian trading on Monday, September 28, after President Trump rejected Iran's Hormuz plan, but the rally faded as the day wore on and the benchmark settled near $105.

A hot start in Asia

The first reaction came in Asia. With markets digesting President Trump's rejection of Iran's seven-day plan to reopen the Strait of Hormuz, Brent Crude traded near $108 a barrel. The November Brent contract was at $107.35 at 08:00 GMT, which is early afternoon in India.

For a market that had hoped diplomacy might reopen the strait, the rejection was a jolt. Iran had offered to reopen Hormuz and restart nuclear talks in exchange for released funds, lifted sanctions and an end to the naval blockade. Trump called it "unacceptable."

The fade

By the time US trading wrapped up, much of that spike was gone. The front-month Brent contract settled at about $105.28, up 96 cents on the day.

Intraday readings were higher. Market reports showed Brent at $108.50 at one point, and market reports cited $108.30. US crude followed a similar path: West Texas Intermediate spiked by more than $4 early, before settling only about 20 cents higher near $92.60.

Why the numbers look so different

Readers checking quotes on Monday may have seen very different prices for Brent. Market reports listed Brent at $98.60, and market reports said it was "above $98, briefly exceeded $100." Those numbers sit far below the $105 settlement cited elsewhere.

One likely explanation, though not confirmed, is the contract month. The November Brent contract expires around September 30, and different sites quote different months. When a market is in steep backwardation, where near-term oil costs much more than oil for later delivery, the gap between contracts can be large. That is a common source of confusion around expiry dates.

What cooled the rally

Reports of possible diplomacy took the heat out of the spike. Separately, Reports said that the White House is weighing relief involving red-dyed diesel, though details were not spelled out.

The physical backdrop remains tight. Only 132 transits passed through the Strait of Hormuz from September 21 to 27, compared with about 130 per day before the war.

The broader impact

Even a partial rally was enough to rattle bonds. TD Securities' Prashant Newnaha said: "President Trump knocking back Iran's offer for diplomacy is driving a renewed rise in oil prices and is weighing on USTs." The 10-year Treasury Yield hit its highest level since 2007, and stocks fell, with the S&P 500 down 59.72 points to 7,683.69. Energy was one of only three S&P 500 sectors to rise.

For India, which imports most of its crude, Brent's level matters directly for fuel costs and inflation.

The November Brent contract roll is next

Watch the Brent contract roll as November expires around September 30, which may cause headline prices to jump or drop without a real change in the market. More importantly, watch for any sign of renewed US-Iran talks. Wednesday's PCE inflation report and Friday's jobs report will show whether oil's strength is feeding into broader price pressures.