Hopes for US-Iran Peace Fade, Global Oil Prices Surge
NEW YORK - Global oil prices closed higher at the end of trading on Tuesday (12/5/2026) local time, or Wednesday morning (13/5/2026) WIB, as hopes for a peace agreement between the United States (US) and Iran faded.
Market concerns intensified due to expectations that global energy supply disruptions would last longer owing to tensions in the Middle East and the closure of the Strait of Hormuz.
Citing Reuters, Brent crude oil prices rose $3.56, or 3.42%, to $107.77 per barrel.
Meanwhile, US West Texas Intermediate (WTI) crude oil prices surged $4.11, or 4.19%, to $102.18 per barrel.
US President Donald Trump stated that ceasefire talks with Iran are now in a “very critical” condition following sharp differences over the terms for ending the conflict.
Iran is said to be demanding a halt to hostilities across the region, the lifting of the US naval blockade, the resumption of Iranian oil exports, and compensation for war damages.
Iran has also reaffirmed its sovereignty over the Strait of Hormuz, a strategic route through which about one-fifth of the world’s oil and liquefied natural gas supplies pass.
“The market is starting to doubt that a peace agreement can be reached soon,” said StoneX analyst Alex Hodes.
The US Energy Information Administration (EIA) stated on Tuesday that it expects the Strait of Hormuz to remain effectively closed until the end of May 2026.
This forecast is longer than the previous projection, which anticipated disruptions lasting only until the end of April 2026.
The EIA also warned that even if energy shipment flows resume, the global oil market is expected to recover to pre-conflict conditions only by the end of 2026 or early 2027.
Energy distribution disruptions in the Middle East region have led several producers to cut their oil exports.
A Reuters survey showed that OPEC oil production in April fell to its lowest level in more than two decades.
The EIA estimates that around 10.5 million barrels per day of oil production were lost during April due to disruptions in the Strait of Hormuz.