Reports from the Middle East can instantly heat up the market and pump commodity prices.
The Strait of Hormuz is still burning
It was no different on Monday, May 4, when global media circulated information about several Iranian missile attacks on key oil ports in the United Arab Emirates.
It is an open escalation in a region through which almost 20% of global oil resources flow.
Read also: Suspicious transactions in the oil market. The insiders earned billions of dollars. “A terrifying example of market manipulation”
The Washington administration’s reaction was immediate. The attempt to use the US Navy to clear shipping lanes, initiated by Donald Trump, instead of calming sentiments, led to the highest increase in tension since the ceasefire a month ago.
Stock market investors reacted very impulsively, resulting in a sharp price increase of nearly 6% in one session.
The market hates uncertainty, so the sight of burning terminals in the UAE is a clear signal. Buy, before oil reaches astronomical levels.
Experts from Goldman Sachs leave no room for illusion, as their latest report shows that global oil stocks are approaching the lowest level since 2018.
The bank estimated that total global reserves now equal 101 days of global demand. Forecasts are even more pessimistic, because if the rate of warehouse depletion remains, by the end of May the ratio will drop to just 98 days.
Particularly concerning is the situation in the refined products segment. Goldman Sachs points out that commercial fuel stocks fell from 50 days before the war to just 45 days now.
This means that safety buffers for products like diesel or aviation fuel are shrinking at a frightening pace. The aviation industry already feels the catastrophic effects of the war in Iran, and the best proof of this is not only the cancellation of 20,000 flights by Lufthansa but also the bankruptcy of American low‑cost airlines.
See also: Fuel prices plunged after Trump’s words. Attacks on Iran were halted. “I instructed the Department of War”
Brent and WTI oil prices sharply up
The sudden cut of part of the supplies and the prolonged blockade of the Strait of Hormuz quickly translate into futures contract prices.
It is worth noting that the UAE last week announced its exit from OPEC, so Iran’s attack on ports and refineries in the United Arab Emirates is a clear geopolitical signal that Iran now controls both the oil market and the situation in the region.
Brent oil, the global benchmark, and the American sweet and light WTI (West Texas Intermediate) recorded one of the most aggressive jumps in recent months.
The price of Brent oil is already 113 USD per barrel, meaning the psychological barrier of 110 USD is long gone. Further escalation in the Persian Gulf will lead to an even faster climb toward around 119 USD per barrel, a record from June 2022.
Chart. Futures contract price for Brent oil
Source: Trading Economics.
Meanwhile WTI oil, which has been below 100 USD per barrel for recent weeks, reached a price of 103 USD on May 5. For futures players, the situation is difficult because technical over‑buy indicators are brutally hit by the hard reality of physical shortages.
Brent and WTI are no longer just numbers on Wall Street traders’ screens; they become a real burden for the global economy, which still fights inflationary pressure.
Chart. Futures contract price for WTI (West Texas Intermediate)
Source: Trading Economics.
See also: Fuel prices before unprecedented rise! Trump strikes Iran, UAE distributes cards. E-petrol: “The change will have long‑term significance”
