Crude oil markets extended Monday’s rally into Tuesday, May 12, 2026, as the Hormuz stalemate deepened with no signs of a diplomatic breakthrough. WTI June futures advanced 4.2% to settle at $102.18 per barrel; Brent July futures gained 3.4% to $107.77. WTI is now $3 higher than its Friday close of $95.42 and $13 above its May 5 intraday low of $88.71. Brent is $7 above its Friday close and $11 above its May 5 low of $96.77.
Since the U.S.-Israeli war against Iran began February 28, both benchmarks are up more than 45%. The structural shift in pricing reflects the IEA’s assessment that the conflict is removing roughly 14 million barrels per day from global supply — the largest supply shock on record. Saudi Aramco CEO Amin Nasser reinforced the framing Monday on an analyst call, warning that the oil market will take until 2027 to normalize if the Strait of Hormuz remains blocked beyond mid-June.
Tuesday’s rally was catalyzed by reports that President Trump is preparing to meet with his national security team to weigh a potential return to military operations against Iran, alongside renewed discussions about restarting commercial vessel escorts through Hormuz. Trump told reporters Monday the ceasefire is “on massive life support” and called Iran’s counterproposal “garbage.” The combination of escalation rhetoric and the prospect of military posture changes drove the geopolitical risk premium back to roughly $25-30 per barrel by Citi’s estimate.
Wall Street’s posture has firmed in tandem. Citi wrote in a note: “Oil prices have been volatile and can rise further if US-Iran dealmaking remains thorny.” Amos Hochstein, former senior energy advisor to President Biden, told CNBC’s “Squawk Box” Tuesday that oil will likely remain in a $90-100 range through the rest of 2026 and into 2027 even if Hormuz reopens in early June. The forecast implies that any post-deal pullback would be limited, and crude could remain structurally above pre-conflict levels for 18-24 months.
Refined products tracked crude higher. Gasoline RBOB jumped to $3.53 per gallon Tuesday from $3.42 Monday. ULSD diesel and heating oil rose to $4.25. Jet fuel climbed to $4.63. Crack spreads — the refiner margin over crude — remain near multi-year highs, supporting input demand even as headline prices rise. The strong product crack environment is helping insulate refiner margins and keeping refineries running flat-out, which in turn maintains crude demand and contributes to the tight supply picture.
Implied volatility climbed across the curve. Near-dated WTI call options saw their largest daily implied-vol increase since early April. Kalshi traders moved odds of WTI reaching $127 at some point in 2026 above 70% — up from roughly 50% a week ago and 65% Monday. Prediction-market positioning reflects expectations that the conflict either escalates further or settles at structurally higher equilibrium prices, not a return to pre-conflict $60-70 WTI.
AAA reported the U.S. national retail gasoline average at $4.504 per gallon Tuesday, down 1.6 cents from Monday. The brief retail pullback reflects multi-day pass-through lag from the May 5-9 crude crash. Tuesday’s WTI rally back above $100 will reverse the retail easing within one to two weeks. California remains highest at $6.16; Hawaii $5.65. Diesel averages $6.18. For continuing coverage, see our live oil prices dashboard.