On Monday, May WTI crude oil closed at $111.24 per barrel, rising by 0.78%, while May RBOB gasoline ended at $3.34 per gallon, up 0.61%. The increase in crude prices follows President Trump’s warning of potential military action against Iran if the Strait of Hormuz is not reopened by Tuesday night. The U.S. military is reportedly preparing for strikes on Iranian energy targets, amid ongoing discussions regarding a possible 45-day ceasefire.
The Strait of Hormuz, which typically handles 20% of the world’s oil supplies, remains largely closed, forcing Persian Gulf producers to cut production by approximately 6%. The International Energy Agency (IEA) notes that over 40 energy sites in the Middle East have suffered severe damage, impacting global oil flow. Markets are also reacting to a substantial price increase by Saudi Aramco, which raised its main oil grade to Asia by $17 per barrel for May, marking the largest jump on record.
Additionally, OPEC+ announced plans to increase output by 206,000 barrels per day in May, although this may be hindered by ongoing conflicts. As of now, U.S. crude oil inventories stand 1.4% above the seasonal average, and the active U.S. oil rig count has slightly increased to 411 rigs, a small recovery from the lows seen last December.
