The closure of the Strait of Hormuz in April disrupted about 10.5 million barrels per day of oil supply from Middle Eastern producers including Iraq, Saudi Arabia, Kuwait, UAE, Qatar, and Bahrain, representing one-fifth of global oil and LNG daily shipments [1, 2, 3, 4]. Saudi Aramco CEO Amin Nasser said the closure caused a weekly loss of 100 million barrels globally, marking the largest energy supply shock in history [2].
Brent crude oil prices surged past $104 per barrel on May 11, then reached $107.77 on May 12, while WTI briefly topped $102, reflecting heightened geopolitical tensions and supply concerns from the Strait closure [5, 6, 3, 7, 2]. Analyst Priyanka Sachdeva described the crude market as a geopolitical news machine where each Washington or Tehran statement causes dramatic price swings [5].
The US Energy Information Administration raised its forecast for 2026 US retail gasoline prices to an average $3.88 per gallon based on the closure lasting through late May and a gradual reopening in June, though supply normalization could take months [1, 4, 2]. Despite this, some sources reported gasoline prices already surged to $4.52 per gallon in some regions [5].
US President Donald Trump sharply rejected Iran's recent ceasefire proposal, calling it “unacceptable” and declaring the talks "on life support," which triggered renewed escalation and contributed to the oil price spike [5, 8, 3, 4, 7]. Trump stated, "The US-Iran ceasefire agreement is on life support; I have rejected Iran’s latest ceasefire proposal" [8]. The US also announced sanctions targeting individuals and companies aiding Iran's oil exports to China to cut off Tehran’s revenue [3, 7]. Treasury official Scott Bessent said the administration will continue using financial sanctions to deprive Iran’s government and military of funding [7].
In response to market pressures, the US has released 53.3 million barrels from its strategic petroleum reserves to ease crude supply concerns [5, 3]. Global oil inventories are expected to decline by about 8.5 million barrels per day in the second quarter of 2026, supporting sustained high oil prices around $106 per barrel [1, 2]. Saudi Aramco reported a 34% year-on-year net profit increase to $33.6 billion in Q1 2026 despite the unrest and price volatility [3].
The US economy showed resilience amid inflation and geopolitical shocks. The consumer price index inflation accelerated to 3.8% year-on-year in April 2026, above expectations, raising concerns about continued Federal Reserve tightening [2, 9, 10, 11]. Gold prices were volatile in early May, rising initially on ceasefire hopes but falling after stronger US inflation data revived rate hike worries. OCBC strategist Christopher Wong said gold now reflects macro risk more than a pure safe haven [8, 12, 9, 11].
Global stock markets saw mixed moves. Taiwan and South Korean markets led gains driven by AI and semiconductor sectors, with Taiwan’s stock index fluctuating strongly around 42,000 points amid high volume and foreign net selling amid geopolitical uncertainties [5, 12, 2, 11]. US stocks hit record highs on May 11 helped by strong earnings and tech momentum despite oil price and inflation concerns [5, 2, 3, 11].
On May 14, oil prices retreated slightly but remained above $100 per barrel as markets awaited the outcome of the upcoming Trump-Xi Jinping summit and hoped for diplomatic progress on Iran’s crisis [7].
