Brent tops $110 after Trump warning

President Donald Trump told Iran on May 17 that “the Clock is Ticking,” and oil prices climbed in early Monday trading as investors reacted to the risk of a longer disruption in the Strait of Hormuz. Brent crude for July rose above $111 a barrel and U.S. West Texas Intermediate moved toward $108, according to market reports. The move extended last week’s gains after Trump renewed pressure on Tehran to reach a deal and reopen the waterway. The price action came as traders also focused on falling global inventories and the limited room for supply losses from the Gulf. ### What exactly did Trump say on May 17? Trump wrote on Truth Social on Sunday that “For Iran, the Clock is Ticking, and they better get moving, FAST, or there won’t be anything left of them. TIME IS OF THE ESSENCE!” according to reports from CNBC, Bloomberg and CBS. France 24, citing Reuters, also reported the warning and said Trump framed it as pressure on Iran to move toward a peace deal. (cnbc.com) CBS reported that the warning came as a shaky ceasefire continued and after Iranian Foreign Minister Abbas Araghchi said on May 15 that Tehran “cannot trust the Americans at all” and was trying to preserve diplomacy. Bloomberg reported that Trump’s message was tied to pressure on Iran to end weeks of war and reopen the Strait of Hormuz. (cnbc.com) ### Why did oil react so quickly? Brent crude for July rose 1.98% to $111.42 a barrel and WTI for June gained 2.43% to $107.98, CNBC reported on Monday. Bloomberg reported Brent advanced above $111 a barrel after adding almost 8% last week, while WTI rose toward $108. France 24 reported Brent at $110.62 and WTI at $107.26 late Monday trading in Asia time. (bloomberg.com) The Strait of Hormuz is central to the move because it normally carries about 20 million barrels a day of crude oil and oil products, according to the International Energy Agency. CNBC reported that the waterway, before the war, handled nearly a fifth of the world’s oil and gas supply. The IEA said in April that the conflict had reduced traffic through the strait to a trickle and called it the largest supply disruption in the history of the global oil market. (cnbc.com) ### How much of this story is about inventories, not just headlines? The International Energy Agency said in its May 13 Oil Market Report that supply losses from the Strait of Hormuz were depleting global oil inventories at a record pace. The agency’s Middle East market page said observed global inventories, including oil on water, fell by 250 million barrels over March and April, or 4 million barrels a day. (iea.org) CNBC reported that the IEA warned “rapidly shrinking buffers” could lead to future price spikes and said inventories could approach all-time lows by the end of May if demand stayed steady. That left traders with less margin for additional outages or shipping delays. ### What is happening in the Strait of Hormuz now? (iea.blob.core.windows.net) CBS reported on May 17 that Trump said the United States, not Iran, was in control of the Strait of Hormuz, while an Iranian official said Tehran would soon unveil a plan to allow some traffic through the strait for a fee. France 24 reported that a Maltese-flagged supertanker resumed its voyage toward Vietnam on May 16 after being held by the U.S. Navy for five days in the Gulf of Oman. (cnbc.com) The IEA said in March that crude and product flows through Hormuz had plunged from around 20 million barrels a day before the war to a trickle, with limited alternative routes available. In a separate April note, the agency said export volumes were running at less than 10% of pre-conflict levels. ### What are markets watching next? The May 13 IEA Oil Market Report is the main reference point traders are using for supply, inventory and shipping data as the Hormuz disruption continues. (cbsnews.com) Bloomberg said oil rose for a third day on May 17 after Trump renewed threats against Iran, and CNBC said the market was also reacting to record-low inventory buffers. (iea.org) Any formal Iranian plan to reopen some traffic through the Strait of Hormuz, and any new statement from Trump or Abbas Araghchi, would be the next concrete markers for oil markets. CBS reported on May 17 that Tehran was preparing such a plan, while the IEA’s next monthly inventory and supply updates will provide the next official benchmark on the scale of the disruption. (cbsnews.com) (iea.org)