Hormuz Strait Situation, U.S.-Iran Strategic Rivalry, and Oil Price Outlook

3.1 Two Parallel Tracks: Fighting While Negotiating Track A: Military Escalation (Pushing Up Risk Premium) ・ The U.S. military’s 'Iron Wall' maritime blockade has lasted 100 days as of October 23, 2026—blocking at least $25 billion worth of Iranian oil exports (U.S. Central Command; 21st Century Economic News, October 24, 2026). ・ Over 20 incidents of vessel attacks were reported in and around the Strait during the first two weeks of October; on October 22 alone, seven vessels were attacked or struck mines; on October 19–20, a U.S. MQ-9 drone was shot down—the 54th such incident to date. ・ Multiple U.S. media outlets report that U.S. and Israeli militaries have already drafted concrete plans for renewed strikes against Iran following the U.S. midterm elections, with potential targets including energy infrastructure, nuclear facilities, and missile and drone arsenals; on October 23, Trump suggested a possible new, limited-scale 'Epic Fury' operation. ・ Iran’s countermeasures: Threatening to expand strikes to U.S. assets across West Asia—including data systems and AI facilities; the Islamic Revolutionary Guard Corps (IRGC) highlighted that seven major undersea fiber-optic cables traverse the Strait of Hormuz; Iran has deployed mines and automated control systems east of the Strait. ・ Israeli Prime Minister Netanyahu spoke with Trump by phone on October 31, urging an 'immediate resumption of war against Iran' after the election—and expressing concern over U.S.-Iran negotiations mediated by Qatar; Trump, meanwhile, expressed hope that 'negotiations be allowed to fully unfold.' Track B: Diplomatic Mediation (Pressing Down Risk Premium) ・ On September 28, Iran—via Qatar—proposed a 'Seven-Day Plan': the U.S. would lift its maritime blockade, rescind oil export sanctions, unfreeze Iranian assets, and restore regional ceasefires; in return, Iran would reopen the Strait within seven days and resume nuclear talks. ・ On October 11, Iran stated the U.S. had 'accepted some conditions' but its response remained 'insufficient'; on October 25, Iran’s newly inaugurated president declared the interim agreement 'failed'; on October 28, Secretary of Iran’s Supreme National Security Council Ali Akbar Ahmadian stated that 'lifting port blockades plus canceling oil sanctions' would allow the Strait to reopen 'within four to seven days.' ・ On November 1, Qatari mediators held their third consecutive day of talks with the Iranian delegation; Iranian Foreign Minister Hossein Amir-Abdollahian confirmed Iran’s agreement to a 'Two-Day Plan': on Day One, the U.S. fulfills commitments (unfreezing funds, lifting the maritime blockade, granting oil export exemptions); on Day Two, the Strait reopens and maritime traffic resumes—only then will formal negotiations restart. ・ On November 2, Iranian President Masoud Pezeshkian announced that the Supreme Leader had granted the government 'certain authority' to pursue peace talks; Iranian Foreign Ministry Spokesperson Nasser Kanaani emphasized that 'everything hinges entirely on the U.S. side’s decisions, actions, and concrete steps.' ・ The U.S. side concurrently signaled de-escalation: Rubio stated Trump leans toward diplomatic resolution; Trump remarked, 'They want a deal—and it’s possible,' and when asked whether military action would resume post-election, replied, 'No,' adding, 'Oil prices fell like a stone today—down nearly $10 per barrel, a historic drop—because people feel war with Iran won’t happen'; Vice President Vance described 'multiple productive dialogues' and expressed 'considerable optimism about prospects for a negotiated settlement.' 3.2 Three Unresolved Core Disputes 1. Sequence of Implementation and Guarantees: The U.S. refuses to lift sanctions first (which would amount to conceding the effectiveness of the 'Strait blockade'), while Iran refuses to reopen the Strait first—mutual distrust and lack of implementation guarantees persist. 2. Whether Nuclear Issues Should Be Addressed Concurrently: Iran states it will adopt a flexible stance on nuclear matters if an agreement on reopening the Strait is reached; the U.S., however, insists nuclear concessions and Strait reopening proceed in tandem. 3. Conflicting Narratives on 'Negotiation Progress': Iran’s Fars News Agency and several other Iranian media outlets claim 'no progress, no new developments' in U.S.-Iran communications, and that the Strait remains fully under Iranian military control—yet draft agreements are circulating, and another round of talks remains possible. Markets thus exhibit high-frequency 'pulse pricing'—re-pricing sharply with each new piece of information.

Crude Oil Plunges 10% Intraday! 'Cutting Trump'—Vance Blames 'Loss in Iran War'; Democratic Leaders Vow to Block Tariffs and War

Jeffries said: 'We pledged to fight for an “affordable America,” and we are determined to deliver on that promise.' He further stressed that, in addition to tariffs and the Iran issue, Congress must also reverse cuts to Medicaid and extend tax credits under the Affordable Care Act. Jeffries has consistently linked the Iran war to rising U.S. domestic living costs, arguing that the conflict drives up energy prices and burdens ordinary families financially. Meanwhile, Trump’s tariff policies further raise costs for businesses and consumers alike—making both issues central Democratic campaign themes targeting Republican economic policy in the midterm elections. With Democrats securing control of both chambers of Congress, Jeffries is poised to become Speaker of the House in the new Congress, and Democrats will regain agenda-setting authority and investigative powers over House committees. On Iran, Democrats have previously introduced multiple War Powers Resolutions seeking to constrain Trump’s ability to conduct sustained military operations without congressional authorization. Jeffries has stated Democrats will continue pushing such resolutions until the war ends. However, Democratic control of Congress does not mean the war can be unilaterally terminated immediately. The new Congress will not formally convene until January 2027, and Trump retains presidential veto power; moreover, the executive branch holds substantial authority over military operations. Democrats may leverage War Powers Resolutions, defense appropriations reviews, and congressional oversight to increase the political and fiscal costs of continued hostilities—but compelling Trump to halt the war outright still faces institutional and political hurdles. The same applies to tariffs: Democrats can advance legislation to repeal or restrict Trump’s tariff measures, but final enactment depends on whether the President signs the bill—or whether Congress can override a veto. This means that, over the next two years, the Trump administration will face not only internal Republican criticism over its war policy—but also more systematic legislative and oversight resistance from a Democratic-controlled Congress. Post-Midterm Diplomatic Resolution Expected—Crude Oil Slumps Sharply Political developments rapidly transmitted to global energy markets. On Wednesday, international crude oil futures extended declines after several consecutive trading sessions of losses. As prospects solidified for Democratic control of both chambers of Congress—and with Vance publicly attributing the Republican defeat to the 'Iran war'—market expectations surged for a U.S. diplomatic resolution and reduced risk of military escalation. The Wall Street Journal reported that Democrats’ sweeping congressional victory heightened market expectations for a relatively swift resolution to the Middle East conflict—and lowered perceived risks of further U.S. military expansion. This sharp oil price drop stems fundamentally from revised market expectations regarding the war’s duration and supply disruption risks. Previously, U.S. and Israeli military actions against Iran—and associated transport risks in the Strait of Hormuz—had persistently elevated the crude oil supply risk premium. Investors feared broader global energy supply disruptions should the conflict intensify. Yet Democrats’ capture of both Senate and House means Trump’s administration will confront significantly stronger congressional checks when pursuing further military action against Iran.

Oil Falls as Trump Says Fresh Iran Attacks Unlikely

1 day ago

Oil prices declined at the market open after President Trump indicated fresh attacks on Iran were unlikely, despite reports of shipping disruptions near the Strait of Hormuz.

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