**Crude Oil and Gasoline Prices Surge Amid Middle East Tensions**
On Monday, May WTI crude oil closed at $84.50, up 6.87%, and May RBOB gasoline rose to $3.12, a 3.73% increase. The spike in prices follows Iran’s announcement on Saturday that the Strait of Hormuz is closed for shipping, responding to the U.S. naval blockade of its vessels. This blockade, which began last week, impacts approximately 20% of the world’s oil and liquefied natural gas transit.
**Production Cuts and Supply Disruptions**
The International Energy Agency reported a disruption of about 13 million barrels per day in global oil supply due to the ongoing war and the Strait’s closure. OPEC+ plans to increase its crude output by 206,000 barrels per day in May, but this may be hindered as Middle Eastern producers face production cuts exceeding 6%. U.S. crude oil inventories recently rose 1.9% above the seasonal five-year average, with production static at approximately 13.6 million bpd.
**Geopolitical Risks Continue**
Tensions escalate as the U.S. Navy reports firing upon and boarding an Iranian-flagged cargo ship, increasing uncertainty regarding potential peace talks. The U.S.-Iran ceasefire is set to expire on Wednesday, with President Trump indicating a low likelihood of extension. Meanwhile, Ukrainian attacks targeting Russian refineries further limit crude oil exports, exacerbating the situation in global energy markets.
