12th May 2026
For weeks the global economy has appeared to survive the Iran crisis better than many feared. Petrol stations remain open, aircraft are still flying and supermarket shelves are still stocked.
Yet beneath the surface the oil market is becoming increasingly fragile, with countries quietly burning through emergency inventories and the world’s safety buffer beginning to shrink at an alarming pace.
The reason prices continue to swing violently up and down is because the market is caught between two realities. On one hand, oil is still flowing. On the other, traders can see that the reserves helping to stabilise the system are gradually being depleted.
When the conflict began there were already millions of barrels of oil loaded onto tankers crossing the oceans. Huge quantities were also sitting in storage terminals, floating storage ships and government strategic reserves. Those supplies acted as a cushion, delaying the immediate impact of disruption in the Gulf.
That is why the world did not suddenly “run out” of oil the moment the crisis started.
However, time is now becoming the critical factor.
A tanker travelling from the Gulf to Europe or Asia can take several weeks. Oil loaded before the conflict continued arriving long after tensions escalated, helping to keep refineries supplied and markets calmer than many expected. But much of that pre-war oil has now been delivered and consumed. Analysts increasingly believe the easy buffer is fading.
The world consumes around 100 million barrels of oil every day. Strategic reserves are enormous, but they were never designed to sustain a prolonged global supply crisis lasting many months. They were intended as temporary emergency shock absorbers.
That is why the oil market has entered a dangerous phase. Prices are no longer being driven purely by current shortages, but by fear of what could happen several weeks ahead.
If traders believe inventories may become critically low in June or July, they bid prices higher today. Yet at the same time, whenever governments release emergency reserves or diplomatic tensions ease slightly, prices temporarily retreat again. The result is the extraordinary “yo-yo” behaviour now dominating global oil markets.
Behind the scenes, countries are scrambling to stretch supplies.
Some tankers are still moving through the Strait of Hormuz despite the risks. Saudi Arabia and the UAE can bypass part of Hormuz using pipelines. Russia, the United States and other exporters continue shipping oil. Governments are also releasing emergency stockpiles to prevent panic.
But inventories are steadily tightening.
The real danger comes before storage tanks actually become empty. Energy analysts warn of what is known as the “operational minimum” the point where inventories become too low for the global system to function comfortably. Modern economies depend upon constant fuel movement. Supermarkets, logistics firms, farming, emergency services and industry all rely heavily on diesel supplies in particular.
Once inventories approach that minimum level, even small disruptions can trigger disproportionate price spikes and panic buying.
That is why markets remain deeply nervous despite supplies still appearing relatively normal at street level.
For the UK, the situation is especially uncomfortable. Britain still produces some North Sea oil and gas, but remains heavily exposed to global energy prices and imported refined fuels. Even if the UK imports relatively little oil directly through Hormuz, world shortages still feed straight into British pump prices because oil is traded on a global market.
Diesel remains the biggest concern because Europe is structurally tighter on diesel supply than petrol. Haulage firms, farms and industry compete for the same fuel pool, meaning diesel prices can accelerate very quickly during supply shocks.
If tensions remain high through the rest of May, there is a realistic possibility that UK petrol prices could rise toward 175p to 185p per litre, with diesel potentially moving above 190p and possibly testing the psychologically important £2-per-litre level in some remote areas. Much will depend on whether Gulf shipping stabilises or deteriorates further over the next two weeks.
The biggest fear in financial markets is not that the world suddenly runs out of oil overnight. Rather, it is that the global economy slowly grinds into a prolonged period of chronic undersupply, where inventories fall week after week while governments desperately try to avoid outright rationing.
That is the scenario traders are increasingly trying to price in and it explains why oil markets now appear trapped between temporary relief rallies and renewed panic spikes almost every day.