Brent crude held near $107 per barrel and West Texas Intermediate traded around $102 on May 13, 2026, as the oil market continued to absorb the fallout from the near-halt of flows through the Strait of Hormuz. The immediate story is not only elevated prices, but the speed at which global inventories are being depleted.
The numbers are unusually large even by oil-market standards. Global oil inventories are projected to fall by an average of 8.5 million barrels per day in the second quarter of 2026, while cumulative supply losses since late February have reached 12.8 million barrels per day. That combination has pushed traders, refiners and policymakers into a more defensive stance.
For investors, the significance extends beyond crude benchmarks. The disruption is rippling through refined products, inflation expectations, government stockpile policy and energy equities, creating a market where physical tightness matters as much as headline price levels.
Key Facts
- Brent crude traded between $106.60 and $107.50 per barrel on May 13, 2026, while WTI traded between $101.67 and $102.30.
- Global oil supply fell by 1.8 million barrels per day in April to 95.1 million barrels per day, taking total supply losses since February 28 to 12.8 million barrels per day.
- Global oil inventories are expected to decline by an average of 8.5 million barrels per day during Q2 2026.
- Observed global inventories drew 129 million barrels in March and another 117 million barrels in April, for a combined two-month decline of roughly 250 million barrels.
- Thirty-two member countries of the IEA have released a combined 400 million barrels from commercial and strategic stocks to soften the shock.
Brent Crude and the Hormuz Supply Shock
The main driver of Brent crude is the scale and duration of the supply disruption linked to the Strait of Hormuz. Gulf producers affected by the closure are estimated to be producing 14.4 million barrels per day below pre-war levels, while vessel transit has slowed to a near standstill since March 2. Even after accounting for lower demand, the market remains undersupplied.
The revised balance for 2026 points to a structurally tight market. Global oil demand is now forecast to contract by 420,000 barrels per day year over year to 104 million barrels per day, yet supply is still projected to average only 102.2 million barrels per day. That leaves an estimated annual deficit of 1.78 million barrels per day, with the steepest stock draws concentrated in May and June.
This matters because oil price behavior is no longer being set solely by speculative expectations. Physical indicators are flashing stress: OECD on-land inventories dropped sharply in April, refinery throughputs are falling, and governments are leaning heavily on emergency barrels. The result is a market where prices may remain volatile even if benchmark crude does not revisit the most extreme intraday highs seen earlier in the crisis.
“The oil market is being forced to balance through inventory depletion and demand destruction at a pace rarely seen in the modern futures era.”
Why refined products may be the bigger problem
One of the clearest shifts in this episode is that the tightest pressure may be emerging in fuels rather than in crude itself. Jet fuel prices have surged across major regions, and jet cracks have widened to roughly $80 to $100 per barrel over crude. That is a powerful signal that refiners are being rewarded for maximizing specific products, not simply running more crude.
Refinery runs are expected to drop by 4.5 million barrels per day in Q2 2026 to 78.7 million barrels per day. Because the bottleneck now runs through shipping, refining and product distribution, a partial reopening of Hormuz would not instantly normalize fuel markets. For airlines, petrochemical companies and heavy fuel consumers, the damage may last longer than the crude-price spike itself.
Implications for Investors
For portfolios, the most immediate implication is that energy exposure remains highly sensitive to geopolitical headlines, but the real investment signals are increasingly found in the physical market. Integrated oil majors, upstream producers with Atlantic Basin exposure, tanker operators and selective refining names could continue to benefit if supply dislocations persist. At the same time, downstream users of fuel face margin compression, particularly in aviation, chemicals and transport-heavy sectors.
Investors should also watch the inflation channel. U.S. consumer inflation accelerated to 3.8% in April from 3.3% in March, while producer prices rose 1.4% month over month, reinforcing the risk that energy costs feed into broader price pressures. Rising oil-linked inflation can complicate the outlook for interest rates, sovereign yields and equity valuations, especially in rate-sensitive sectors.
There are also reasons to avoid a one-way view. Strategic reserve releases totaling 400 million barrels are cushioning the market, Atlantic Basin exports have risen by 3.5 million barrels per day since February, and some analysts still expect Brent to average below current spot levels over the full year if Hormuz flows resume in June. That creates a split market: near-term tightness remains severe, but medium-term pricing could ease quickly if shipping routes normalize and demand continues to weaken.
The next phase will likely hinge on whether transit through Hormuz resumes on a credible timetable and whether commercial inventories stabilize before operational stress turns into outright fuel rationing. Until then, investors should expect continued volatility across crude, refined products, inflation trades and energy-sensitive equities.
VIP Trading Signals
