Brent crude futures surged above $109 per barrel on 15 May 2026, with West Texas Intermediate crossing $105, as ongoing US-Iran tensions in and around the Strait of Hormuz continued to drive fears of sustained supply disruption in one of the world's most critical energy chokepoints.¹² The moves extend a volatile period for oil markets that has seen prices spike as high as $126 during the most acute phases of the conflict before retreating on ceasefire hopes, only to climb again each time those hopes faded.⁷

The immediate catalyst for today's move was a combination of Trump's dismissal of a proposed Iranian diplomatic framework — which briefly sent oil lower on hopes of de-escalation — and news emerging from the US-China summit that China had agreed to purchase US crude oil and LNG, adding to demand-side pressure just as supply concerns were already elevated.⁴⁵ The result was a market whipsawing between geopolitical risk-on and risk-off signals within the space of hours.¹³

Why the Strait of Hormuz matters so much

The Strait of Hormuz is a narrow waterway between Iran and the Arabian Peninsula through which approximately 20% of the world's crude oil supply transits each day — roughly 21 million barrels — making it the single most consequential maritime chokepoint in the global energy system.⁶⁸ Any sustained disruption to tanker traffic through the strait, whether from Iranian naval action, mine-laying, or attacks on shipping, would immediately reduce global oil supply in a market that was already running tight before the conflict began.²⁹

Since the start of US-Iran hostilities, tanker insurance premiums for vessels transiting the strait have risen sharply, some operators have begun routing around the Persian Gulf entirely via the longer Cape of Good Hope route, and several major oil companies have reduced or suspended liftings from Gulf producers.⁶⁷ These operational disruptions compound the supply pressure even without a complete blockade, because higher insurance costs, longer voyage times, and reduced vessel availability all effectively tighten the market in ways that are not fully captured by looking at headline production numbers alone.⁸

The price trajectory and its economic impact

Oil briefly reached $126 per barrel in late April 2026 during a period of particularly intense confrontation, before falling sharply when reports of a possible negotiating framework between the US and Iran circulated.⁷⁹ Trump's subsequent rejection of that framework sent prices climbing again, and they have been oscillating in a wide range ever since — creating significant uncertainty for businesses, airlines, logistics companies, and governments trying to budget for energy costs.¹³

At current Brent prices above $100, US petrol prices have risen above $4.50 per gallon at the pump — a politically sensitive level that inflames inflation concerns and squeezes household budgets, particularly for lower-income Americans who spend a larger share of their income on fuel.⁵⁶ The Federal Reserve's inflation challenge is partly a direct function of oil prices: energy costs feed directly into the CPI, and elevated oil keeps headline inflation higher than it would otherwise be even if underlying demand pressures eased.⁴

What markets are watching

Traders are closely following the pace of diplomatic contacts between Washington and Tehran, the frequency of shipping incidents in the Gulf, and any signals from Saudi Arabia or other OPEC producers about whether they intend to increase output to compensate for disrupted Iranian and other Gulf flows.²⁸ Saudi Arabia has significant spare production capacity and has historically used it to stabilise markets during supply crises, but the kingdom's relationship with the current US administration is complex and its willingness to pump more without concessions on other issues is not guaranteed.⁹⁶

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Oil Tops $109 as US-Iran Conflict Keeps the Strait of Hormuz on Edge — Brent Hits Highest Level in Weeks