Even as Hormuz Remains Ablaze, Oil Prices Fall Again
Oil prices extended their decline on Wednesday morning trade (20 May 2026), as last week’s sharp rally began to lose steam, with the market gradually easing its geopolitical risk premium even though the Hormuz Strait remained far from normal.
According to Refinitiv at 09:30 WIB, Brent July contract (LCOc1) stood at US$110.86 per barrel, down from Tuesday’s close of US$111.28. West Texas Intermediate (WTI/CLc1) was at US$103.66 per barrel, down from US$107.77.
The decline came after the price surge had stalled since the start of the week. In the past two weeks, Brent rose from US$100.06 per barrel on 7 May to a peak of US$112.10 on 18 May, an increase of almost 12%, driven by tensions in the Iran-Israel conflict that rattled global supply concerns.
Two Chinese-owned Very Large Crude Carriers (VLCCs) carrying a total of 4 million barrels of Iraqi Basrah crude and Qatari al-Shaheen crude finally managed to leave the Strait of Hormuz after being held for more than two months in the Gulf.
One vessel, Yuan Gui Yang, carried 2 million barrels of Basrah crude to Unipec, a Sinopec trading unit. The other, Ocean Lily, carried a mix of Iraqi and Qatari crude to Fujian.
This development provides a breath of relief for markets. Since the Iran conflict, the biggest worry has been the disruption of tanker traffic through Hormuz, the narrow passage that serves as an exit for nearly a fifth of global oil trade. As tankers begin to move again, markets re-evaluate extreme supply disruption scenarios.
Nevertheless, the situation remains fragile. Reuters notes that tankers must now pass through transit routes designated by Iran. Global energy flows are not yet paralysed, but are operating under heavy political and military pressure.
Price moves in recent days show the market hovering between two poles: on one side physical oil continues to flow out of the Middle East; on the other, the risk of escalation remains high. A strike on an oil facility, a tanker, or the closure of the sea lane could push prices back to the year’s highs.
Volatility remains very high. In under two weeks, Brent moved from around US$100 to above US$112, before retreating back to about US$110. WTI followed a similar pattern, rising from US$94.81 on 7 May to US$108.66 on 18 May, before dropping to US$103.66 this morning.