Brent holds $112.69, WTI $103.94
- Brent crude stayed elevated around $112 a barrel in early May as the Strait of Hormuz remained severely disrupted, keeping global supply fears front and center. - The key number is the outage itself — EIA estimated 9.1 million barrels a day of Gulf crude production was shut in during April. - That matters because prices now carry a war-risk premium even as banks and traders still argue demand destruction could cap further upside.
Oil is expensive again for a very specific reason — a huge chunk of the world’s seaborne crude is still struggling to move through the Strait of Hormuz. That matters because Brent is the global benchmark, so when traders price in trouble there, the shock spreads well beyond the Gulf. The missing piece has been whether this was just a panic spike or a longer supply squeeze. In early May, the answer still looks uncomfortably close to the second one. (eia.gov) ### Why is Hormuz such a big deal? The Strait of Hormuz is the narrow shipping lane that connects Gulf producers to global buyers. If traffic there slows, Saudi Arabia, Iraq, Kuwait, the UAE, Qatar, and Bahrain cannot easily reroute all those barrels somewhere else. That is why a regional conflict turns into a global oil story almost immediately. (eia.gov)disruption is not theoretical. EIA said Gulf producers collectively shut in 7.5 million barrels a day in March and 9.1 million barrels a day in April because flows through the strait stayed limited. The WTO trade tracker painted the same picture from the shipping side — outbound crude flows through Hormuz were down about 95% two months after the closure that began on February 28, 2026. (eia.gov) ### Why does Brent rise more than WTI? Brent reflects waterborne crude sold into the global market. WTI is more tied to inland U.S. supply. When shipping risk jumps, Brent usually reacts harder because the problem is not just missing barrels — it is also the cost and uncertainty of moving them. EIA said the Brent-WTI spread averaged $12 a barrel in March and was expected to peak at $15 in April for exactly that reason. (eia.gov) ### So are these prices pure panic? Not really. Panic can push prices up for a day or two, but a sustained premium needs a sustained constraint. EIA’s April outlook expected Brent to peak around $115 in the second quarter of 2026, then ease only gradually as shut-ins abate. That is basically the market saying the supply shock is real, but not necessarily permanent. (eia.gov)? Libya matters because it is one more source of uncertainty layered on top of the Gulf shock. In a calm market, Libyan outages can be annoying but manageable. In a tight market, even smaller disruptions get amplified because traders are already paying up for reliability. The catch is that Libya is not the main driver here — Hormuz is. That chokepoint is doing most of the heavy lifting in price formation. (eia.gov) ### Why aren’t prices even higher? Because the market is still arguing with itself about demand. Higher oil eventually slows consumption, hurts manufacturing margins, and raises transport costs enough to cool growth. Barclays lifted its 2026 Brent forecast to $100 from $85 on May 1, but it also warned that $100 is not some neat new equilibrium — just a price consistent with a still-unresolved d(eia.gov)ay, Barclays said prices could reprice toward $110. (money.usnews.com) ### What does this mean outside energy? It means inflation risk. UNCTAD warned in April that the Hormuz disruption was already feeding through shipping, trade, and financing conditions, with global merchandise trade growth expected to slow sharply in 2026. EIA also expected U.S. gasoline prices to (money.usnews.com)line tickets. (eia.gov) ### Bottom line? The market is not paying for a headline anymore. It is paying for a bottleneck that still has not cleared. As long as Hormuz flows remain deeply impaired, crude can stay expensive even if traders keep betting that high prices will eventually crush demand. (eia.gov)
