NEW YORK, May 18, 2026, 10:02 EDT
Oil prices fell and stocks steadied on Monday after reports that Washington may offer Iran a temporary sanctions waiver, giving markets a thin reason to price in progress toward reopening the Strait of Hormuz. The move reversed an earlier risk-off trade sparked by drone attacks in the Gulf and a fresh jump in crude.
That matters now because the strait, a narrow waterway used in normal times for about 20% of global oil and gas trade, remains largely closed. George Lagarias, chief economist at Forvis Mazars, told Reuters that markets were “panicking” over the chance it stays shut, with Brent earlier near $110.55 a barrel and U.S. crude around $102.48. Reuters
The supply cushion is getting thinner. International Energy Agency chief Fatih Birol said commercial oil inventories had only “several weeks” left, while strategic reserve releases adding 2.5 million barrels a day were “not endless.” The IEA said global observed inventories fell by 246 million barrels in March and April. Reuters
Bond yields, which rise when bond prices fall, remained the pressure point for investors. The U.S. 10-year Treasury yield touched 4.631%, its highest since February 2025, while the 30-year yield rose to 5.159%; markets now price a more than 50% chance of a Federal Reserve rate increase by December, Reuters reported.
Finance officials are trying to keep the selloff from feeding on itself. G7 finance ministers meeting in Paris put inflation, debt and bond-market volatility on the agenda, and French Finance Minister Roland Lescure said, “We are no longer in a period where public debt is not a subject.” Reuters
By the New York morning, Bloomberg reported S&P 500 futures up 0.2%, Brent below $108 and the 10-year Treasury yield near 4.57%. Reuters later said the S&P 500 and Nasdaq opened higher as semiconductor stocks recovered and last week’s bond rout cooled.
The geopolitical backdrop stayed raw. UAE officials said a drone strike caused a fire at the Barakah nuclear power plant, though radiological safety levels were unaffected and there were no injuries; Saudi Arabia said it intercepted three drones. President Donald Trump said Iran must move “fast” after talks to end the U.S.-Israeli war with Iran appeared stalled. Reuters
The oil shock is already visible at the pump. AAA listed the U.S. national average gasoline price at $4.515 a gallon on Monday, up from $4.058 a month earlier and $3.179 a year earlier; diesel averaged $5.631.
Companies are also absorbing the hit. A Reuters analysis found the Iran war has cost global companies at least $25 billion, with 279 firms citing the conflict as a trigger for price increases, production cuts, furloughs, dividend suspensions or other defensive moves. Whirlpool CEO Marc Bitzer said consumers were “holding back” on replacements and repairing products instead. Reuters
That puts this week’s earnings in a harder light. Nvidia reports Wednesday and Walmart Thursday, testing the two trades that have held up U.S. equities: artificial intelligence spending and consumer resilience. Nvidia’s report follows strong moves in peers including AMD and Intel, whose outlooks helped fuel a broader chip rally; graphics processing units, or GPUs, remain central to AI model training, while central processors are gaining attention for AI inference, where models answer real-world queries.
But relief from a sanctions-waiver headline could fade fast. Emma Moriarty, portfolio manager at CG Asset Management, said the longer Hormuz stays shut, the more likely higher rates and energy prices begin to bite corporate profits; RBC Capital Markets strategist George Moran said disruption from the Iran war is looking less temporary.
