Oil Jumps to $112 Before Trump Delays Iran Strike

Brent crude rose 2.6% to $112.10 a barrel on Monday — the highest settlement in more than two weeks — before President Trump said he would hold off a planned strike on Iran that had been set for Tuesday. WTI gained 3.1% to $108.66. Both benchmarks gave back roughly a dollar on Tuesday after Trump said negotiations were continuing, with Brent settling near $110.83 and WTI at $108.21. The underlying supply picture remains severe. The Strait of Hormuz, through which roughly a fifth of global crude normally flows, has been effectively closed since fighting began on February 28. Only seven ships crossed the strait in the 24 hours before Monday's session, against a pre-war average of 140 daily passages. The International Energy Agency has called it the largest supply disruption in the history of the global oil market. The U.S. Strategic Petroleum Reserve released a record 9.9 million barrels in the week ending May 15, cutting stockpiles to approximately 374 million barrels — the lowest since July 2024. IEA Executive Director Fatih Birol warned Monday that commercial stocks now represent only "a few weeks' worth" of supply and that the 2.5 million barrels a day in strategic releases "are not endless." Monday's session reflected the thin conditions that have become routine. WTI June futures swung more than $6 a barrel on just 55,000 contracts — about 15% of the 2026 daily average of 359,000 contracts. Implied volatility has averaged 78% since the conflict began, spiking to 106% on March 12, levels last seen at the onset of the COVID-19 pandemic. The spot-to-front-month spread widened to nearly $30 a barrel in early April as buyers scrambled for immediate barrels. Production from the Gulf Cooperation Council — Kuwait, Iraq, Saudi Arabia and the UAE — fell by 6.7 million barrels a day by March 10, reaching at least 10 million barrels a day by March 12. Brent averaged $117 a barrel in April, up $46 from February, and briefly touched $138 on April 7. Physical cargoes are still moving, but sporadically. Three VLCCs carrying a combined 6 million barrels exited the strait on Wednesday: the South Korean-flagged Universal Winner with 2 million barrels of Kuwaiti crude, the Chinese-flagged Yuan Gui Yang with 2 million barrels of Iraqi Basrah, and the Hong Kong-flagged Ocean Lily with 2 million barrels split between Qatari and Iraqi grades. That followed two Chinese tankers carrying roughly 4 million barrels of Iraqi crude that transited Monday. More than 100 tankers remain stranded in the Gulf. Daily transits have collapsed from 125 to 140 vessels before the war to around 10. Trump's delay hinges on what he called "serious negotiations," though no details have been disclosed. Iran's Foreign Ministry confirmed Monday it relayed its position to Washington through Pakistan. The Energy Information Administration publishes its weekly U.S. inventory report on Wednesday; analysts expect a draw of 3.4 million barrels for the week ending May 15. Any resumption of military action — or a further SPR drawdown — will move prices sharply in a market that has run out of buffer.