The Floating Oil Is Gone And The Gulf Has Been Warned

December Brent settled Tuesday at 113.88 a barrel, down 1.93, and WTI at 99.90, down 1.86, Rigzone reported. By early Wednesday Brent was back above 115 on Trading Economics’ own screen, an intraday reading that will have changed by the time this letter is read, after two straight sessions of declines.

The reason given for the rebound was a report out of Washington. The Wall Street Journal reported Tuesday, citing people briefed on the communications, that the United States has told several Arab states in the Persian Gulf, through diplomatic and military channels, to prepare for a short, intense American campaign against Iran after the 3 November midterm elections, Iran International reported. The states were not named, and this letter has not been able to read the Journal’s own article, so everything in this section is relayed.

The preparations the Journal described, as relayed by Iran International and Anadolu Agency, are a Patriot battery brought up from Texas, troops pulled back from exposed bases, munitions being restocked, bombers and fighters readied, and a second carrier strike group and a Marine expeditionary unit due to join about 20 warships in the region next month, though some ships may rotate out. President Trump has made no final decision, the report said. The White House declined to comment on “sensitive military plans that may or may not exist” and said he keeps all options on the table.

Hromadske, summarizing the same report, listed the possible targets as Iranian energy infrastructure, nuclear facilities, and missile and drone capabilities, and said the Gulf governments fear renewed fighting would expose their own energy sites to Iranian missiles and drones.

Tuesday’s decline in oil had come from the other direction. Saudi, Pakistani and Turkish officials had been in Tehran, Iran’s Security Council chief met Supreme Leader Mojtaba Khamenei afterward, and the four countries agreed to keep talking, Reuters reported as carried by The Star, while Trading Economics added that Qatari mediators had reportedly handed Iran a new draft agreement. Then the Houthis said they had targeted Saudi Arabia’s largest oil refinery with a missile, and Saudi authorities had not immediately confirmed it, Reuters reported. This letter attributes no attack to any party beyond what that party itself claims.

Talks on one track, preparations on the other, and in forty-eight hours Brent has followed both.

The other instrument carries no election date. Kpler data obtained by Iran International showed that by mid-October the Iranian oil afloat outside the American blockade line had fallen to zero. Kpler analysts told the Wall Street Journal, in a report published on 21 October, that the floating reserve, which peaked near 90 million barrels, dropped below one million by 5 October and has since been exhausted, The Jerusalem Post reported.

“There’s no more oil to discharge to China anymore,” said Homayoun Falakshahi, Kpler’s head of crude oil analysis, who put oil sales at roughly 30 to 40 percent of Iran’s government income.

Kpler counted Iranian deliveries to China at more than 1.55 million barrels a day from January to May and at less than half that from June through September. China’s recorded imports from Malaysia, the label Kpler says most Iranian cargoes carry, fell to 276,000 barrels a day in September from nearly 1.3 million on average in 2025, Iran International reported, and Chinese customs has recorded no Iranian crude since 2020.

Adm. Brad Cooper, who commands US Central Command, has estimated that the blockade has taken about 25 billion in oil income from Iran, and CENTCOM and the Treasury Department froze about 350 million in Iranian cryptocurrency in recent weeks, The Jerusalem Post and Iran International reported. Both are American government figures, and this letter has not verified either.

These sources measure oil afloat, not oil pumped. Analysts cited by the Journal said Chinese payments for earlier cargoes can take up to two months to arrive, so payments from older sales may still be landing in Tehran, and Iman Nasseri of FGE NexantECA, who said the American strategy is working, added a warning of his own: “Let’s wait another year and see if the system can stand.”

A floating reserve that peaked near 90 million barrels reads zero. A Gulf that has just been told to prepare has no such reading.

Tuesday’s closes, per Investrade: the S&P 500 at 7,722.60, up 0.60 percent; the Dow at 52,377.57, up 0.03 percent; the Nasdaq Composite at 26,477.81, up 1.18 percent. NordFX carried the S&P 500 at 7,723 and the Nasdaq up 1.2 percent. Investrade had the ten-year Treasury at 4.993 percent, Yahoo Finance showed 4.995 in early Wednesday trading and NordFX 5.02, and these sources differ, so this letter does not reconcile them.

The Treasury auctioned 70 billion of five-year notes on Tuesday at a high yield of 4.845 percent, with a bid-to-cover of 2.33, up 0.12 from the previous auction, and indirect bidders took 60.0 percent, The Vault Report said. A second aggregator showed 162.8 billion tendered for the 70 billion offered, which ties to 2.33. Yesterday this letter printed 45.68 percent for indirect bidders in the two-year, so the five-year drew a larger share from that group, though the two auctions are different maturities. The sources give no tail or average for this auction, and this letter does not grade it.

The Fed decides at 2 p.m. Eastern today, and a press conference with Chair Kevin Warsh follows. A hold is the consensus, and markets are pricing a quarter-point hike in December, Simply Wall St reported on Yahoo Finance; that is market-implied, not a Fed signal. Microsoft and Alphabet report after the close, and September PCE inflation and the third-quarter GDP estimate arrive at 8:30 a.m. Thursday.

AAA put regular gasoline at 4.2471 a gallon on Wednesday 28 October, against 4.4768 a month ago and 3.0437 a year ago, with diesel at 6.3499.