Oil prices tick up after Trump rejects Iran proposal, Hormuz traffic remains at a standstill
Oil prices tick up after Trump rejects Iran proposal, Hormuz traffic remains at a standstill
Jake ConleyMon, May 11, 2026 at 3:14 PM UTC
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Oil prices ticked up through Monday morning as investors digested comments from President Trump on Sunday that Iran’s response to US proposals is “totally unacceptable,” pushing out any potential timelines for opening the Strait of Hormuz.
Futures on Brent crude (BZ=F), the international benchmark, held on to gains of roughly 2% to trade above $103 per barrel after rising to trade near $106 Sunday evening. Those on US benchmark WTI crude (CL=F) were up 1.5% Monday morning to trade near $97 after initially crossing $100 shortly following the Sunday open.
As President Trump rejects Iran’s proposal, the two sides remain far apart over a potential end to a conflict that has created a supply shock Saudi Aramco CEO Amin Nasser called on Monday the “largest the world has ever experienced.”
Tehran has reportedly demanded a lifting of the US naval blockade of the Strait of Hormuz, an end to Israel’s military campaign against the Iran-backed militia Hezbollah in Lebanon, and a lifting of sanctions on the Islamic Republic’s economy. Iran is also reportedly seeking some measure of control over vessel traffic through the waterway.
Iranian parliamentary speaker and previous IRGC general Mohammad Bagher Ghalibaf said earlier in May that “the new equation of the Strait of Hormuz is in the process of being solidified.”
In Washington, the White House has repeatedly asserted that the US naval blockade will remain in effect until Iran agrees to American terms over the Islamic Republic’s nuclear enrichment program. President Trump on Thursday said three US destroyers reportedly targeted by Iran while transiting the Strait of Hormuz would rejoin the US blockade, and that the US would restart military action if Tehran doesn’t sign a deal.
Iran had reportedly offered to transfer its stores of enriched uranium to a third-party country while maintaining its enrichment facilities, per the Wall Street Journal. Yet President Trump has insisted on a full dismantling of the regime’s nuclear capacity.
While the US-Iran ceasefire remains nominally in place, the global market remains increasingly under pressure even as prices remain contained below wartime high levels.
Jet fuel is transported by tank trucks to aircrafts at the airport in Duesseldorf, Germany, when airlines fear a kerosene shortage due to the war in Iran, Monday, April 27, 2026. (AP Photo/Martin Meissner) ()
While crude prices have remained somewhat contained — driven by a combination of factors including exceptionally large global stocks heading into the war — prices on refined products have risen much faster. In the US, gasoline prices now average $4.52 per gallon, per AAA, and major American airlines have reported multibillion-dollar costs from the rise in jet fuel prices.
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“The unprecedented has occurred,” JPMorgan strategists led by Natasha Kaneva wrote Monday morning, noting that the market is less concerned with the scale of a shock than its duration.
“A temporary shock, even a large one, can be absorbed,” the strategists wrote. “A prolonged disruption cannot.”
Three months into the war, commercial traffic through the Strait of Hormuz remains at a near standstill, marking the critical waterway’s first near-complete stoppage in its recorded history, per JPMorgan.
Three tankers, two of them laden with oil, exited the strait on Sunday, according to data from the intelligence firm Kpler, a far cry from the traffic counted in the hundreds of crossings before the war. An LNG tanker flagged to Singapore U-turned near the mouth of the Strait of Hormuz on Monday after attempting to become the second vessel laden with Qatari gas to cross the waterway since the conflict began, per the Wall Street Journal.
With more than 10 million barrels per day of supply lost, per JPMorgan, global oil inventories have fallen to near-record lows. Even if the strait were to fully reopen to commercial traffic by June, the JPMorgan strategists wrote, the losses already seen have put the oil market in a tough position.
The “exceptionally large” drawdowns throughout March, April, and May — combined with the annual summer demand spike — are likely to push global inventories in OECD countries to levels of operational stress by August. Crude oil in floating storage declined by 33% in the week ended May 8, according to the intelligence provider Vortexa.
“A core assumption of our framework is that the accelerating pace of oil inventory depletion will ultimately force the reopening of the Strait of Hormuz, one way or another,” the JPMorgan strategists wrote. Until the strait is opened, the market will lose 100 million barrels per week, Saudi Aramco’s Nasser said Monday on a call with analysts and investors.
More than 40 nations, led by France and the UK, are expected to meet today to discuss plans for naval escorts of vessels through the Strait of Hormuz once a stable ceasefire agreement between Washington and Tehran has been reached.
Given the magnitude of the demand pullback, OECD commercial inventories are on track to approach operational stress levels by early June, according to JPMorgan. (J.P. Morgan Commodities Research)
Jake Conley is a breaking news reporter covering US equities for Yahoo Finance. Follow him on X at @byjakeconley or email him at jake.conley@yahooinc.com.
Source: “AOL Money”
