New York, May 2, 2026, 13:06 EDT
- Brent slipped on Friday as Iran floated a new proposal for talks with the U.S., though the benchmark settled at $108.17 after hitting $126.41 just the day before.
- It’s the Strait of Hormuz that’s feeling the strain, with usual shipments of crude, oil products, and liquefied natural gas still facing serious disruptions.
- Traders are still betting on another surge in U.S. crude—prediction markets price a year-end WTI contract above $125.01 at 60 cents.
Oil traders aren’t seeing the Iran war as a blip anymore. They’re factoring in a drawn-out conflict—one that could leave the Strait of Hormuz semi-blocked for a while and push crude well past today’s levels, despite Friday’s dip.
Brent crude settled at $108.17 a barrel on Friday, slipping 2.02%. West Texas Intermediate, or WTI, the U.S. crude benchmark, ended at $101.94. Iran’s outreach to Washington—channeled through Pakistani mediators—sparked what Phil Flynn of Price Futures Group described as hope for an “off-ramp.” Even with the late drop, both contracts closed out the week higher, and Brent had earlier surged to $126.41, marking the highest level since March 2022. Reuters
It matters now because the squeeze isn’t limited to futures anymore. The International Energy Agency reported a 10.1 million barrel-per-day drop in global oil supply in March, citing tanker bottlenecks through Hormuz and attacks on Middle Eastern energy sites—calling it the biggest disruption ever recorded. Stockpiles outside the Gulf region plunged as shipments stalled.
Roughly 20 million barrels of crude and oil products move through the Strait of Hormuz each day—about 25% of the world’s seaborne oil trade. Saudi Arabia and the United Arab Emirates do have limited alternatives, yet Iran, Iraq, Kuwait, Qatar, and Bahrain depend on the strait for the bulk of their exports. Nearly all LNG shipped out of Qatar and the UAE also passes through these waters.
It’s a disconnect that’s hard to ignore. Reuters flagged some crude grades selling in the physical market for about $130 a barrel—far above Brent futures, which hovered closer to $110. “Physical markets are the true reflection,” said Tamas Varga, analyst at PVM Oil Associates, describing what’s happening around Hormuz. Reuters
The Economist didn’t mince words in its April 30 leader summary: oil had jumped, but “further to go” was the call. That disconnect—where futures lag physical barrels—has fueled the argument, especially after weeks of traders laying wagers on a ceasefire or strait reopening that hasn’t come. The Economist
Prediction markets are moving in step. CNBC pointed out that Kalshi traders were placing bets on U.S. oil topping wartime highs, while Coinbase’s listed market was pricing the WTI-above-$125.01 contract at 60 cents, above-$130.01 at 59 cents, and above-$135.01 at 50 cents. Each of these pays out $1 if their mark gets hit, so their prices are loosely interpreted as odds, before fees.
Still, plenty of analysts argue the market is lagging here. Vandana Hari, who heads up Vanda Insights, told CNN oil had “nowhere to go but up” unless there’s a clear, lasting reopening of the strait. At Rystad Energy, Janiv Shah warned that more hits on energy infrastructure would light a fire under benchmarks. KTVZ
Forecasts keep moving up. According to a Reuters survey of 32 economists and analysts, Brent is now expected to average $86.38 a barrel in 2026, with WTI pegged at $80.07—both figures higher than previous calls. Anushree Ganeriwala at the Economist Intelligence Unit pointed to the timing of a Hormuz reopening as the “key variable” for the outlook. For Bridget Payne at Oxford Economics, if the strait stays shut for months, record futures prices are “definitively a possibility.” Reuters
OPEC+ wants to send a message that it’s ready to boost supply, but for now, that move looks mostly symbolic. Reuters reported that seven members—Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia and Oman—have agreed in principle to lift June output targets by roughly 188,000 barrels per day. Even so, Saudi Arabia, Iraq and Kuwait are still contending with export slowdowns tied to the Hormuz situation. The UAE’s departure from OPEC+ only muddies the group’s monthly production calculations.
Californians are seeing $6.06 for a gallon of gas, according to AAA figures reported by the Guardian. The national average reached $4.39 on Friday, marking a nearly four-year high. That spike is adding to affordability pressures while central banks weigh if the oil shock could spiral into broader inflation.
Still, there’s a chance the trade flips. If a lasting diplomatic breakthrough happens, or if Hormuz opens back up for real, or alternative routes start moving more crude quickly, some of that risk premium might vanish—especially if OPEC+ barrels actually show up instead of just being talked about. But even so, oil execs and traders told Reuters it wouldn’t snap back instantly; it could be weeks or months before flows look normal again after the strait is clear.
The immediate focus isn’t really on oil’s price tag, but on whether futures are finally pricing in barrels that have stalled. That’s a much tougher situation for refiners, airlines, central banks and drivers than a single session of selling might indicate.
