Oil Markets in a Race Against Time as Hormuz Closure Threatens $150 Crude

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.

President Donald Trump said Monday that the U.S. ceasefire with Iran was "on life support" after he received what he called Tehran's "garbage" response to a U.S. proposal for ending the war.

Despite the loss of almost 1 billion barrels, futures have failed to top levels seen in 2022 as the market entered the crisis with buffers, and investors kept expecting the strait to reopen, analysts including Martijn Rats said in a note.

In addition, higher crude exports from the US, coupled with slowing imports from China, helped to shield the market from the shock, they said. But in a bullish scenario where the blockade lasts longer, Morgan Stanley expects Brent crude prices could rise into the $130 to $150 per barrel range.

According to market data, WTI crude traded at $71.50 per barrel on Sunday, up 0.6%, while Brent crude stood at $75.20 per barrel, up 0.5%.

Aramco Warns Fuel Stocks Heading for Critically Low Levels

The oil market will not normalize until 2027 if the disruption in the Strait of Hormuz persists past the middle of June, Saudi Aramco CEO Amin Nasser said.

The oil market will lose 100 million barrels of supply every week Hormuz is closed, the CEO said. The total net loss so far is 880 million barrels.

Oil inventories are rapidly drawing down, particularly for products like gasoline and jet fuel, due to the supply loss from the Middle East, the CEO said. "This may reach critically low levels ahead of the summer driving and travel season," Nasser said.

The biggest challenge facing the market is the disruption to the global tanker fleet, Nasser said. The fleet is "mixed up" with tankers in the wrong places, he said.

Aramco President and CEO Amin H. Nasser said in a statement that the company's East-West Pipeline, which runs across Saudi Arabia from its Eastern oil fields to the Red Sea, is now operating at its maximum capacity of 7 million barrels of oil per day. The Financial Times reported that Europe's oil majors reap up to $4.75bn from trading on Iran war volatility , with trading desks at BP, Shell and TotalEnergies outperforming their U.S. rivals.

Coal Demand Surges as Countries Scramble for Alternatives

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. The trend has been accelerating in recent weeks, and global coal imports are on track to reach their third-highest monthly level on record, according to estimates by analytics platform Kpler cited by the Financial Times.

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.

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 , according to Wood Mackenzie.

"In supply shocks of this scale, coal becomes a critical fallback for energy security," Sushmita Vazirani, Principal Analyst, Bulk Commodities at Wood Mackenzie. "Despite decarbonisation commitments across Asia, tightening LNG supply and elevated prices are accelerating fuel switching back to coal."

China's Inflation Accelerates on Energy Costs

China's consumer inflation accelerated to 1.2% in April, topping analyst estimates, as the Middle East crisis drove a surge in energy prices. OilPrice.com reported that the Chinese consumer price index (CPI) rose by 1.2% last month from a year earlier, accelerating from 1% annual inflation in March. The CPI exceeded an analyst consensus estimate of 0.9% inflation last month.

Meanwhile, Natural Gas Futures Edging Higher as Trump Rejects Peace Deal , according to Natural Gas Intel. Per Polygon data, Henry Hub natural gas traded at $3.25/MMBtu on Sunday, down 2.4% from the prior session.

What Happens Next

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.

The conflict has caused the restriction of nearly all traffic through the Strait of Hormuz, leading to what the International Energy Agency has characterised as the "largest supply disruption in the history of the global oil market".

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, said Rats and his team. Their most bullish case for Brent was that it reaches $130 to $150 a barrel if U.S. and Chinese buffers run low, "before reopening relief arrives."

The prospects for a diplomatic breakthrough remain uncertain. The talks are unlikely to make significant progress until the US president meets his Chinese counterpart Xi Jinping later this week, a regional source told CNN.