May 2026 saw extreme volatility in global energy markets: Tensions escalated sharply in the Strait of Hormuz after Iran said it fired on a U.S. destroyer that ignored warnings, sharply raising shipping risks. In response, WTI crude surged 4% intraday to USD 98.62/bbl on May 8, while Brent topped USD 103/bbl, threatening global oil supplies.

The Strait of Hormuz is a critical energy chokepoint, handling ~30% of global oil shipments (17 million barrels daily). Escalation triggered two key impacts: higher shipping costs and delays as carriers suspended routes, raising supply chain disruption risks; and limited OPEC+ output hikes (only 188,000 barrels/day for June after the UAE’s exit), leaving a supply deficit.

Price spikes have broad economic impacts: imported inflation from higher fuel and chemical prices; corporate margin pressure on energy-intensive sectors (airlines, logistics, manufacturing); and EM stress as oil importers face wider trade deficits and faster forex reserve depletion.

Uncertainty remains high, with prices driven by Strait tensions, OPEC+ policy, and global demand. Near term, oil will likely stay elevated, with risks of further spikes if conflict worsens.