Oil Markets in a Race Against Time as Hormuz Closure Enters Third Month

President Donald Trump rejected Iran's counterproposal to end the 10-week war in the Middle East on Sunday, calling it "totally unacceptable," while Tehran vowed to "never bow," prolonging a standoff that has choked the Strait of Hormuz and roiled global energy markets . Brent crude, the global oil benchmark, was up 2.9% to $104.2 a barrel on Monday, while WTI, the US benchmark, rose 2.4% to $97.7 a barrel , according to CNN. According to market data, Brent crude was trading at $104.2 a barrel as of Monday morning.

More than a month since a temporary ceasefire began on April 8, talks between the US and Iran have faltered, with Tehran wanting a permanent end to the war while Trump has insisted that Iran must first reopen the Strait of Hormuz, through which one-fifth of global oil and natural gas exports are shipped during peacetime , Al Jazeera reported. Tehran has demanded that the U.S. end its blockade of Iranian ports as a condition for it to open the Strait of Hormuz , according to CNBC.

Morgan Stanley Warns of $150 Oil in "Race Against Time"

The oil market is in "a race against time" as the factors that combined to restrain price rises from the Iran war stand to come under strain if the Strait of Hormuz stays closed into June, according to Morgan Stanley, with the market entering the crisis with buffers and investors kept expecting the strait to reopen, while higher crude exports from the US, coupled with slowing imports from China, helped to shield the market from the shock , Bloomberg reported.

If the Strait of Hormuz remains closed for a longer time than the U.S. and China could sustain with the tweaked levels of their crude oil exports and imports, respectively, Dated Brent could surge to as high as $150 per barrel, according to Morgan Stanley , OilPrice.com reported. China could likely sustain the current situation for months and even for the "balance of the year," but U.S. inventories are under more pressure, with Morgan Stanley's most bullish case for Brent reaching $130 to $150 a barrel if U.S. and Chinese buffers run low, "before reopening relief arrives" , according to MarketWatch.

Goldman Sachs warned that global oil inventories are crashing and approaching an eight-year low, with the rate of depletion so fast that it exposes the market to further shocks, with analysts noting that "while global oil stocks are 'unlikely to hit minimum operational levels this summer, the speed of depletion and supply losses in some regions and products is concerning'" , OilPrice.com reported.

Coal Demand Surges as Energy Crisis Deepens

Global coal shipments and imports surged in March and April as buyers scrambled for fuel amid massively disrupted oil and gas supply from the Middle East, with the trend accelerating in recent weeks and global coal imports on track to reach their third-highest monthly level on record, according to estimates by analytics platform Kpler cited by the Financial Times , OilPrice.com reported.

Last month coal shipments to South Korea, Japan, and the European Union surged by 27% from a year earlier, data from BIMCO, the world's biggest shipowners' association, said last week, as the Asian importers and the European bloc are scrambling for alternatives to gas supply from the Middle East, currently trapped behind the Strait of Hormuz , according to OilPrice.com.

FOB Newcastle 6,000 kcal/kg coal averaged US$126/t in March 2026, with prices rising to US$132/t in recent trades, up from US$114/t in February, as prolonged disruption to Middle East energy supplies is triggering a rebound in global thermal coal demand, as countries scramble to secure power amid constrained LNG flows through the Strait of Hormuz , according to Wood Mackenzie. Taiwan is preparing to restart the 2.1 GW Hsinta coal-fired power plant, which could consume approximately 5.5 Mt annually , Wood Mackenzie reported.

China Inflation Hits Multi-Year Highs on Energy Shock

China's producer prices rose at their fastest pace in more than three years in April, while consumer inflation also beat forecasts, as Iran war-driven commodity costs and holiday spending delivered a broader reflationary boost to the economy, with consumer prices ticking up 1.2% in April from a year earlier, beating economists' estimates of 0.9% growth, and the producer price index jumping 2.8% from a year ago, the highest since July 2022 , CNBC reported.

The producer price index (PPI) increased 2.8 per cent from a year earlier, compared with a 1.6 per cent rise forecast in a Reuters poll, with the gauge having reversed a 41-month declining streak in March when prices rose 0.5 per cent , according to Business Standard. The global energy shock from the Strait of Hormuz blockade has rippled across industrial sectors, with non-ferrous metals mining prices rising 38.9% from a year earlier and oil and gas extraction by 28.6% , CNBC reported.

China, the world's largest crude importer, has cushioned the worst of the energy shock through its strategic oil stockpiles and a diversified mix of renewable energy sources — though economists warn the buffer has limits as the disruption prolongs , according to CNBC.

Strait Remains Effectively Closed After 10 Weeks

As of May 11, 2026, the strait has been effectively closed or severely disrupted for approximately ten weeks, placing it among the most prolonged chokepoint disruptions in modern energy history , according to Discovery Alert. Since the war began, traffic has been reduced to a trickle, with just 191 vessels recorded crossing in the entire month of April, according to Kpler data , CNN reported.

A Qatari liquefied natural gas tanker crossed the strait on Sunday for the first time since the war began, a passage that was reportedly approved by Iran to build confidence with Qatar and Pakistan , CNBC reported. However, while a conditional ceasefire is in place, almost no shipping has used the strait and it remains effectively closed , according to the UK House of Commons Library.

The unresolved standoff hangs over Trump's upcoming summit with Chinese President Xi Jinping later this week in Beijing, where the Iran war is likely to take center stage, CNBC reported.