Oil Markets Tighten as Sanctions Lapse

The Trump administration on Saturday allowed a sanctions waiver to lapse that had previously allowed countries including India to buy Russian seaborne oil after a month-long extension aimed at easing oil supply shortages and high prices due to Iran's closure of the Strait of Hormuz , according to Reuters.

U.S. Treasury Secretary Scott Bessent had previously said he would not renew the general license allowing the purchase of Russian oil stored on tankers . India is the top consumer of Russian seaborne crude, and its purchases have been near record highs in April and May following previous sanctions waivers , Reuters reported. The move comes despite two top Democratic U.S. senators, Jeanne Shaheen and Elizabeth Warren, on Friday urging the Trump administration against renewing the waiver, arguing that it was providing revenue to Russia to aid its war in Ukraine, but there was no evidence it was bringing down fuel costs for American consumers .

The decision to let the waiver expire adds another layer of complexity to global oil markets already reeling from the worst supply disruption in history. The war in the Middle East is creating the largest supply disruption in the history of the global oil market, with crude and oil product flows through the Strait of Hormuz plunging from around 20 mb/d before the war to a trickle currently , according to the International Energy Agency's March 2026 Oil Market Report.

According to market data, WTI crude traded at $71.50 per barrel on Friday, up 0.6%, while Brent crude stood at $75.20 per barrel, up 0.5%. However, Brent rose to 109.26 USD/Bbl on May 15, 2026, up 3.35% from the previous day, and over the past month, Brent's price has risen 9.93% , according to Trading Economics.

Can Argentina Fill the Supply Gap?

Local and international energy companies are vying for additional exploration blocks in Argentina's Vaca Muerta shale basin as the Middle East crisis and the blocked Strait of Hormuz are reigniting a global race to tap resources outside conflict zones , OilPrice.com reported on May 16.

The Argentinian shale play is already outperforming U.S. plays such as the Permian, Bakken, and Eagle Ford on well productivity measures, Rystad Energy reckons, and expects crude production from Vaca Muerta to top 1 million bpd by the end of the decade . "Argentina is offering international companies their best organic entry point into Vaca Muerta in a decade," Jai Singh, Head of US Oil & Gas Research at Rystad Energy, said, referring to the bid round of 2026 .

Authorities have opened 15 new exploration blocks to both international and domestic energy firms—the largest such auction since 2016 and more than double the six blocks offered in the previous provincial round , according to IndexBox. Breakeven prices across the most promising blocks range from $32 to $49 per barrel, competitive with many established global shale plays .

The investment momentum is substantial. Mercuria-backed Phoenix Global Resources is preparing a $6 billion expansion in Argentina's Vaca Muerta shale, as President Javier Milei's RIGI incentives boost investor confidence and accelerate drilling activity , World Oil reported in March. By some estimates, the RIGI program has already drawn applications from energy and mining projects that would require a total investment of more than $50 billion .

What About the Fertilizer Crisis Nobody's Watching?

While oil prices dominate headlines, urea prices jumped by nearly 46% in a month, as geopolitical and energy shocks hit nitrogen supply chains , according to Nature. The World Food Programme has warned that global food systems are under severe strain, with more than 360 million people facing acute food insecurity in 2026 and tens of millions at risk of famine .

According to one shipping services company, the Signal Group, 20 percent of the world's fertiliser originates in the Gulf, while 46 percent of global urea supply comes from the Gulf. Qatar Fertiliser Company (QAFCO), considered the world's largest urea supplier, alone supplies 14 percent of the world's urea , Al Jazeera reported.

Analysts working in the sector told CNBC that they had seen the cost of FOB granular urea in Egypt — a bellwether of nitrogen fertilizers — jump to around $700 per metric ton, up from $400 to $490 before the war began . Fertilizer prices have risen sharply, with Middle East granular urea increasing by 19 percent in the first week of March, while Egyptian urea prices surged by 28 percent , according to the FAO Chief Economist.

Reuters captured the ground-level reality bluntly in a March 13 report: farmers in the U.S. and Canada, already worried about another year of low profits or losses, now face spring planting disruptions as they struggle to find fertilizer — with prices for any available supplies having spiked more than a third since the war in Iran paralyzed global trade .

Can Gulf Producers Route Around Hormuz?

The United Arab Emirates will double its capacity to export crude oil bypassing the Strait of Hormuz by next year, as it seeks to reduce reliance on the shipping chokepoint , Bloomberg reported on May 15.

Abu Dhabi National Oil Co. is accelerating the construction of a pipeline that runs to the port of Fujairah on the Gulf of Oman. The company already operates a 1.5 million barrel-a-day conduit from its oil fields to the port on its eastern coast, which has proved to be a lifeline during the Middle East conflict .

Accelerating the pipeline's construction also follows the UAE's decision to exit the Organization of Petroleum Exporting Countries. Freed of the group's production limits, the UAE has said it will be able to respond more nimbly to market demands amid the disruption caused by the war , according to Rigzone.

However, bypass capacity remains limited. The war has shown that existing alternative routes are at risk; Saudi's East-West pipeline was attacked by Iran in April, cutting throughput by roughly 700,000 barrels per day. The port of Fujairah (the end-point of the UAE pipeline) also came under attack from Iranian drones, disrupting oil loading operations at its crude export terminal , CNBC reported.

What Changed This Week

The convergence of policy decisions and market realities is reshaping global energy flows. Washington ended temporary relief for Russian oil buyers even as the Hormuz crisis persists, tightening available supply further. Argentina emerged as a credible alternative to Middle Eastern and North American shale, attracting tens of billions in committed capital. Meanwhile, the fertilizer shortage—largely ignored in energy coverage—threatens to translate oil supply disruptions into food security crises across developing economies. The UAE's pipeline acceleration signals Gulf producers are planning for a post-Hormuz world, even as attacks on alternative infrastructure reveal the vulnerability of workarounds.

What to Watch

This report assumes that the Strait of Hormuz remains effectively closed until late May, with shipping traffic beginning to pick up in June. Oil shipments through the strait, however, will not likely reach pre-conflict levels until later this year , according to the EIA's May Short-Term Energy Outlook. The fuel duty rates will gradually return to March 2022 levels, by rate increases on: 1 September 2026, 1 December 2026, 1 March 2027 , according to the UK government, potentially adding pressure to European consumers already facing elevated energy costs. Total Rigs 2026 (Wk./Wk.) +3 551, Oil (Wk./Wk.) +5 (415) Gas (Wk./Wk.) -1 (128) , according to Baker Hughes data for the week ending May 15, suggesting U.S. producers are cautiously adding capacity in response to elevated prices.