Oil prices remained volatile on May 18, 2026, amid ongoing risks of re-escalation in the Iran war and stalled diplomatic efforts between Tehran and Washington. The latest phase of negotiation saw Iran submit amended peace terms through Pakistani intermediaries, focusing exclusively on ending the conflict without addressing nuclear issues, according to Iranian officials.
Meanwhile, former U.S. President Donald Trump issued a warning to Iran that “the clock is ticking” for accepting a peace deal, threatening severe consequences if Tehran fails to act swiftly. Trump also criticized U.S. media outlets and Democrats, claiming they would misrepresent any Iranian surrender as a U.S. loss.
Oil Market Reactions and Strait of Hormuz Traffic
Brent crude oil prices surged as high as $112 per barrel overnight before easing to around $108.75 on Monday morning, still significantly above pre-war prices near $70 per barrel. This price volatility coincided with fluctuating stock indices globally, including slight gains in the U.S. stock market and declines in Asian markets.
Commodity vessel traffic through the strategic Strait of Hormuz, a vital chokepoint for global oil and LNG shipments, showed a modest rebound last week to 55 vessels after hitting a wartime low of 19. The Iranian Revolutionary Guards indicated a willingness to allow more ships to pass through the strait, though overall numbers remain in line with wartime averages since the conflict’s escalation in February.
Diplomatic Stalemate and Military Actions
Diplomatic progress between Iran and the U.S. remains tentative. Iranian state media reported an unconfirmed U.S. offer to suspend sanctions on Iranian oil exports during ongoing peace negotiations, a potential concession that has not been officially confirmed by Washington. However, Iranian negotiating sources described fundamental differences persist, particularly over U.S. demands related to Iran’s nuclear program, which Tehran rejects as politically motivated and contrary to national rights.
On the military front, U.S. forces announced they have redirected 84 commercial vessels and disabled four amid a U.S.-led blockade of Iranian ports in place since mid-April. Concurrently, Israeli strikes in Lebanon have caused substantial casualties, with Lebanese health authorities confirming over 3,000 deaths since March and continuing conflict near the southern border.
Why it matters
The protracted Iran war and fragile ceasefire attempts keep oil markets under pressure, with supply uncertainties contributing to price swings that affect global economies. The strategic significance of the Strait of Hormuz further underscores risks to global energy supplies. Diplomatic developments, including possible sanctions relief during talks, could influence market stabilization but face major hurdles given the ongoing military confrontations and entrenched political positions.
Sources
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