Crude oil prices surged on May 26 as the U.S. Central Command conducted strikes on targets in southern Iran, including boats and missile launch sites, to protect U.S. troops from Iranian threats.
Brent crude rose by $1.40, or 1.5%, to $97.56 per barrel, while U.S. West Texas Intermediate crude traded at $91.25.
The strikes come amid heightened tensions in the Strait of Hormuz, where Iran has effectively halted most non-Iranian shipping, disrupting nearly one-fifth of global oil and gas flows. Explosions were reported in Bandar Abbas and nearby coastal regions, further escalating the situation.
Both Washington and Tehran have indicated progress on a memorandum of understanding that could pause the three-month-long conflict and allow for a 60-day negotiation period towards a final agreement. However, U.S. President Donald Trump has reiterated his demand for Iran to surrender its enriched uranium.
The blockade in the Strait of Hormuz has significantly impacted global oil supply, with analysts warning that even if an agreement is reached, it could take months for shipping activity to recover. Saudi Aramco CEO Amin Nasser has cautioned that disruptions could delay market stability until 2027.
Morgan Stanley has highlighted the current oil market as being in "a race against time," noting that while higher U.S. crude exports and softer Chinese demand have cushioned the supply shock, a prolonged closure of Hormuz could tighten global supplies further.
Background
The ongoing conflict and its impact on the Strait of Hormuz underscore the critical nature of this energy chokepoint. As negotiations continue, the global oil market remains on edge, with potential implications for supply and pricing in the coming months.
As negotiations continue, the global oil market remains on edge, with potential implications for supply and pricing in the coming months.
