12th May 2026
Oil has crept back up towards — and in some trading briefly above — $106 a barrel mainly because traders now fear the Middle East situation is deteriorating again after hopes of a breakthrough between the US and Iran faded.
The biggest factor remains the continuing disruption in the Strait of Hormuz, one of the world’s most important oil shipping routes. Around 20% of globally traded oil normally passes through the narrow waterway, so even partial disruption sends shockwaves through energy markets.
Over recent days the market had briefly calmed because investors thought some sort of ceasefire or shipping agreement might reopen the route more fully. But those hopes weakened after US criticism of Iran’s latest proposals and signs that negotiations are stalling.
Another reason prices are climbing again is that the oil market is no longer just worrying about “future risk” and traders are increasingly concerned about actual physical shortages. Shipping traffic through Hormuz remains far below normal levels, with reports suggesting only a fraction of the usual tanker numbers are moving through safely.
At the same time, countries and oil companies have been drawing on emergency reserves and stockpiles to keep supplies flowing. That helped calm prices earlier, but markets are now asking how long those reserves can realistically last if disruption continues into summer.
The market is also extremely volatile because every political statement causes huge swings. Oil has effectively become headline-driven trading. One optimistic comment about talks can knock $10–15 off the price in hours, while renewed military threats or tanker incidents send it sharply higher again.
There is also growing concern that some Asian buyers — especially China, India, Japan and South Korea — may begin competing more aggressively for non-Middle East supplies from the US, Africa and elsewhere. That competition itself pushes prices higher globally.
For the UK, the impact is already beginning to feed through into wholesale fuel and energy costs. Petrol and diesel prices tend to lag behind crude oil movements by a couple of weeks, so if Brent stays around or above $100 for long, drivers are likely to see another noticeable increase at forecourts later in May.
Airlines, haulage firms and manufacturers also face rising costs, which could add further inflation pressure across the economy.