20-05-2026
Executive Summary
WTI crude oil prices remained highly volatile and slipped near $102 per barrel as markets reacted to mixed developments surrounding the ongoing U.S.–Iran conflict. Sentiment improved slightly after former U.S. President Donald Trump suggested that tensions with Iran could ease if negotiations progress, while also warning that military action could resume if talks fail. Reports that the U.S. had paused a planned strike increased hopes for a possible diplomatic resolution, although Iran warned that any renewed attacks by the U.S. or Israel could expand the conflict beyond the region. Meanwhile, disruptions in the Strait of Hormuz continued to support crude oil prices, as the key global shipping route remained partially restricted despite some tanker movement resuming during the week. Overall, crude oil prices remained elevated amid ongoing geopolitical uncertainty, supply concerns, and volatility in global energy markets.
20-05-2026
US–Iran Conflict Keeps Oil Market Volatile
WTI crude oil prices remained highly volatile during the week as markets closely monitored developments surrounding the ongoing U.S.–Iran conflict. Sentiment improved slightly after former U.S. President Donald Trump suggested that tensions with Iran could ease if negotiations progress, while also warning that military action could resume if talks fail. Reports that the U.S. had paused a planned strike increased hopes for a possible diplomatic resolution, although Iran warned that any renewed attacks by the U.S. or Israel could expand the conflict beyond the region. These developments kept geopolitical uncertainty elevated and maintained strong volatility in crude oil prices.
Strait of Hormuz Disruptions Continue Supporting Oil Prices
Geopolitical tensions around the Strait of Hormuz continued to remain one of the biggest drivers of crude oil prices during the week. Although some tanker movement resumed through the region, the key global oil shipping route remained partially restricted amid ongoing military monitoring and security concerns. Reports indicated that several crude oil super tankers successfully departed the Strait, slightly easing immediate supply fears, but traders remained cautious as nearly 20% of global seaborne crude oil passes through the route. As a result, concerns over potential supply disruptions continued supporting crude oil prices and keeping market volatility elevated.
China Refiners Cut Crude Processing Amid Weak Demand
Chinese state-owned refiners sharply reduced crude oil processing during the week due to weaker fuel demand and disruptions in Middle East supply. Refining margins remained under pressure as high crude prices reduced profitability, creating concerns over slowing oil demand from one of the world’s largest importers. This development limited the upside momentum in crude oil prices despite ongoing geopolitical tensions.
20-05-2026
· Global oil production.
Disruptions to crude oil production in the Middle East have increased significantly since our April Short-Term Energy Outlook (STEO). We assess that Iraq, Saudi Arabia, Kuwait, the UAE, Qatar, and Bahrain collectively shut in 10.5 million barrels per day (b/d) of crude oil production in April. This report assumes that the Strait of Hormuz remains effectively closed until late May, with shipping traffic beginning to pick up in June. Oil shipments through the strait, however, will not likely reach pre-conflict levels until later this year, and we expect some oil production in the Middle East to remain disrupted over that period. Disrupted production leads to large oil inventory draws, particularly in May and June, limiting downward oil price pressures even after flows through the strait rise. Because this month we assume both a later reopening of the Strait of Hormuz and a longer recovery period for shut-in oil production, we forecast global oil inventories will decrease by 2.6 million b/d this year, compared with a 0.3 million b/d decrease in last month’s STEO.
20-05-2026
· IEA & OPEC Outlook
According to the latest IEA and
OPEC outlook, crude oil prices may remain elevated despite weaker global
demand, mainly due to supply disruptions caused by the ongoing Iran conflict
and tensions around the Strait of Hormuz. The IEA expects global oil supply to
decline sharply, creating a supply deficit and supporting higher crude prices.
Meanwhile, OPEC maintained a positive long-term demand outlook led by Asia,
India, and transportation demand, while also highlighting tightening
inventories and refinery pressure across major economies.
IEA suggests Brent crude and U.S. WTI are unlikely to see sustained declines
until there is a ceasefire or restoration of stable Middle East exports.
Current forecasts from EIA and energy research firms see Brent remaining around
$95 - $115 and WTI around $90 - $105 in the near term while war risk persists.
OPEC remains more optimistic than the IEA. In its latest assessment, OPEC still
expects oil demand growth in 2026 around 1.17 - 1.4 million barrels per day,
driven mainly by Asia, India, China, aviation, petrochemicals, and
transportation demand. As per OPEC Global oil demand is projected to average to
105.07 million bpd in the second quarter, OPEC’s report said, down from the
105.57 million bpd forecast in last month’s report.
According to both, Crude Oil prices may remain elevated until either:
Ø The War de-escalates
Ø Hormuz shipping normalizes
Ø Inventories recover materially.
Overall, both agencies suggest that Brent crude may remain above $100 and WTI above $95 as long as geopolitical tensions and supply risks continue. However, any ceasefire or improvement in Middle East exports could trigger a sharp correction in oil prices.
20-05-2026
Strong U.S. Dollar Limited Crude Oil Upside
During the week, the strengthening U.S. Dollar Index created pressure on crude oil prices and limited the overall upside momentum in USOIL. Since crude oil is globally traded in dollars, a stronger dollar makes oil more expensive for other countries, which can reduce global demand sentiment.
At the same time, rising U.S. bond yields and expectations of higher interest rates also supported the dollar, leading to cautious trading in the commodity market. As a result, despite strong geopolitical tensions and supply risks, crude oil prices witnessed profit booking near higher levels.
20-05-2026
Inventory Analysis
U.S. crude oil inventories continued to show tightening supply conditions, as the previous week already recorded a sharp drawdown of -4.3M barrels, much stronger than market expectations. For today’s release, markets are expecting another inventory decline of around -2.5M barrels, which indicates that supply pressures may continue in the near term.
Gasoline inventories also witnessed a significant decline, highlighting stable fuel consumption and improving seasonal demand trends. Lower Cushing inventories remained supportive for WTI crude prices, reflecting tightening supply at the key delivery hub.
At the same time, distillate inventories unexpectedly moved into positive territory, signalling some softness in industrial and diesel demand. Overall, the inventory trend remains supportive for crude oil prices, as consecutive drawdowns continue to strengthen bullish sentiment in the energy market.
20-05-2026
Technical Analysis
USOIL is trading near the crucial $105 resistance zone, where a sustained closing above this level may strengthen bullish momentum in the market. In such a scenario, upside potential could gradually extend towards the first target zone near $112, while stronger buying interest may further push prices towards the $118 region.
On the downside, $93 remains an important support level to maintain the current bullish structure, while the broader support zone is placed around $88–$78, which may continue acting as a strong demand area for the market.
20-05-2026
Details of Research Analyst