US military strikes send oil prices soaring as Hormuz Strait tensions escalate

NEW YORK – World oil prices surged at the close of trading on Tuesday (26 May 2026) local time, or early Wednesday (27 May 2026) WIB, following US military strikes on Iran. The strikes dashed market hopes for a peace deal to end the three-month conflict and reopen shipping lanes in the Strait of Hormuz. Brent crude rose 3.6%, or $3.44, to $99.58 per barrel, according to Reuters. On Monday (25 May 2026), Brent had fallen 7% to its lowest level since 20 April 2026 amid optimism over a potential US-Iran agreement. However, the situation changed after Iran accused the US of violating the ceasefire with a strike it described as a defensive action in southern Iran. US Secretary of State Marco Rubio said negotiations to end the conflict would require several more days. The two nations had been discussing a memorandum of understanding to halt the war and reopen Hormuz shipping lanes, with a 60-day period to address more complex issues, including Iran’s nuclear programme. ‘We are still waiting for further details on a potential agreement,’ said UBS analyst Giovanni Staunovo. ‘For now, we are seeing renewed tensions in the Middle East, with shipping flows through the strait remaining limited,’ he added. Since the conflict began in late February, Iran has effectively halted almost all non-Iranian shipping in and out of the Strait of Hormuz. This has disrupted about a fifth of global oil and liquefied natural gas (LNG) flows. However, vessel tracking data shows three LNG tankers recently passed through the strait, bound for Pakistan, China, and India. Meanwhile, the UK Maritime Trade Operations reported an external explosion on the port side of a tanker near the waterline, approximately 60 nautical miles from Muscat, Oman’s capital. Market concerns have also risen as the Middle East conflict risks driving global inflation through higher energy prices. Reuters reported that rising inflation has prompted central banks, including the Federal Reserve, to worry about further monetary tightening, which could increase borrowing costs and slow economic growth.