Crude Oil Prices Finish Sharply Higher Amid Tightening Global Supplies

Rich Asplund

Mon, May 18, 2026 at 3:27 PM EDT 5 min read

June WTI crude oil (CLM26) on Monday closed up +3.24 (+3.07%), and June RBOB gasoline (RBM26) closed up +0.0588 (+1.59%).  Crude oil and gasoline prices rallied sharply on Monday, with crude posting a 3-week high and gasoline posting a nearly 4-year nearest-futures high.  Crude prices soared on Monday amid doubts about the progress of peace negotiations to end the US-Iran war that is keeping the Strait of Hormuz closed and tightening global oil supplies.   However, crude prices dropped more than -$2 a barrel in post-market trading Monday afternoon when President Trump said he canceled a scheduled attack on Iran on Tuesday after Qatar asked him to hold off.

Harsh rhetoric from President Trump boosted crude oil prices when he said the "clock is ticking" on Iran, and it "better get moving FAST on a peace deal, or there won't be anything left of them."  Also, crude prices rose after Iran said that, despite draft changes, US demands for ending the war were "excessive and unrealistic."

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Ramped-up geopolitical tensions are supportive for crude prices after Reuters reported that Pakistan has deployed 8,000 troops, a squadron of fighter jets, and an air defense system to Saudi Arabia as part of a mutual defense pact, a deployment described as a "substantial, combat-capable force" to support Saudi Arabia if it comes under further attack.  On Sunday, the UAE reported that a drone sparked a fire in a power station at the United Arab Emirates' Barakah nuclear plant, and Saudi Arabia said it intercepted and destroyed three drones that entered its airspace.

Crude prices moved lower briefly on Monday after Tasnim, Iran's semi-official news agency, reported that the US has proposed a temporary waiver on Iran oil sanctions until a final peace agreement is reached.

Last Wednesday, the International Energy Agency (IEA) said in a monthly report that global observed oil inventories declined at about 4 million bpd in March and April, and that the market will remain "severely undersupplied" until October, even if the conflict ends next month.

Energy prices remain underpinned by the US-Iran war, which is keeping the Strait of Hormuz essentially closed.  The ongoing conflict is exacerbating global oil and fuel shortages, as about a fifth of the world's oil and liquefied natural gas transits through the strait.  Goldman Sachs estimates that crude output in the Persian Gulf has been curtailed by about 14.5 million bpd, and that the current disruption has drawn down nearly 500 million bbl from global crude stockpiles, which could hit a billion bbl by June.  Persian Gulf oil producers have been forced to cut production by roughly 6% due to the closure of the Strait of Hormuz as local storage facilities reach capacity.  Last Thursday, the IEA said that more than 80 energy facilities had been damaged during the conflict, and that recovery could take as long as 2 years.