London, May 18, 2026 – Oil swung between gains and losses with new questions emerging from both the US and Iran on the progress of peace negotiations aimed at reopening the critical Strait of Hormuz.
West Texas Intermediate futures traded near $106, with Iran’s semi-official Tasnim news agency reporting that Tehran says US conditions for a deal are still excessive despite changes in a latest draft proposal.
The comments indicate the logjam over the war and the Strait of Hormuz aren’t imminently easing. Over the weekend, US President Donald Trump posted on social media that “For Iran, the Clock is Ticking, and they better get moving, FAST, or there won’t be anything left of them.”
Prices briefly pared earlier after Tasnim also reported that the US is proposing a temporary waiver on oil sanctions imposed on Iran until a final deal is reached.
The US hasn’t confirmed the offer. Iranian oil has been under severe sanctions since US Trump withdrew from a nuclear deal in his first term.
Oil has risen almost 50% since the US and Israel first attacked Iran at the end of February, with subdued flows through the Strait of Hormuz crimping supply from Persian Gulf producers.
Prices have been extremely volatile, however, with steep drops at times when a peace hopes seem to be taking shape.
The market is in “a race against time” as the factors that restrained price rises from the war stand to come under strain if the vital waterway stays closed into June, Morgan Stanley said last week.
The International Energy Agency reiterated on Monday that global oil inventories are falling quickly.
Two of the major solutions in the oil market so far have come from the world’s two largest economies.
The US has been exporting record volumes overseas, while Chinese imports have plunged dramatically. Processors in the latter churned through the least amount of oil since 2022, according to data released on Monday.
Energy facilities were targeted in the Persian Gulf over the weekend, with an attack by drones sparking a fire at a United Arab Emirates nuclear facility and underscoring the fragility of the ceasefire.
Still, paper markets remain relatively subdued despite signs of physical tightness. Money managers cut net-long positions in both Brent and WTI last week to the lowest levels since March 3.
“Many traders are still staying sidelined, and managed money length was reduced significantly last week, limiting some of the positioning pressure,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Group.
“Headlines remain the primary driver, but there is a growing focus on fundamentals as the market appears less stressed than many would have expected given the scale of supply disruption.” (Bloomberg)
