WTI Crude Oil Futures Retook $100 Amid Strait of Hormuz Closure. 5/12/26

Why It Matters

The sustained premium on front‑month WTI underscores heightened geopolitical risk, tightening short‑term supply and prompting higher input costs for refiners and downstream industries worldwide.

Key Takeaways

• WTI June futures surged past $100, highest daily gain since May 4
• Closure of Strait of Hormuz extended to 11 weeks, boosting prices
• President labeled Iran ceasefire proposal “weak” and “on life support.”
• Near‑term WTI contracts in backwardation, reflecting short‑term supply tightness
• EIA forecasts 10.5 million bpd production shut‑ins through April, recovery June

Summary

June WTI crude futures reclaimed the $100 barrier on May 12, posting the strongest intraday gain since May 4. The contract opened near $98, rose to $102.72, and closed up roughly 4.4% as the market reacted to geopolitical tension in the Middle East.

The rally was driven by the U.S. administration’s decision to reject Iran’s latest peace overture, extending the closure of the Strait of Hormuz into its 11th week. Prices jumped 4.74% on the day, with the low briefly at $98, a 0.7% rise from the previous settlement.

In remarks to reporters, the president described Iran’s cease‑fire proposal as “the weakest” and “on life support.” Tanker traffic from the UAE, Saudi Arabia and Qatar has only partially resumed, keeping volumes well below pre‑conflict levels. The front‑month WTI curve remains in backwardation, signaling traders’ belief that supply tightness will persist.

The Energy Information Administration projects a combined 10.5 million barrels‑per‑day production shut‑in across Iraq, Saudi Arabia, Kuwait, the UAE, Qatar and Bahrain for April, with a gradual lift beginning in June. Until physical flows through the strait normalize, the premium on near‑term contracts is likely to stay, pressuring refiners and influencing global oil pricing.

Original Description

WTI Crude Oil futures rallied aggressively, retaking the $100 level and posting their largest percentage move higher since early May. The surge was primarily driven by geopolitical developments, specifically the continued closure of the Strait of Hormuz extending into its 11th week following the rejection of Iran's latest peace proposal. With the ceasefire reportedly on life support and tanker traffic remaining well below pre-conflict levels, a significant risk premium remains embedded in front-month contracts. The WTI Crude Oil futures curve remains in backwardation, highlighting trader consensus on short-term supply tightness as the EIA factors in substantial 10.5 million barrel per day production shut-ins across the Middle East.

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