Oil Retreats After Monday Surge as U.S.-Iran Strait Standoff Rattles Markets

CNBC reported Tuesday that oil prices reversed course after a powerful Monday session, with traders reassessing the severity of supply disruptions stemming from escalating U.S.-Iran tensions in the Strait of Hormuz.

Crude Pulls Back After Monday’s Sharp Rally

Brent crude for July delivery fell roughly 1.3% to $113 per barrel in Tuesday trading. U.S. West Texas Intermediate dropped a steeper 2.1% to around $104 per barrel. Both benchmarks had surged on Monday — Brent by 6% and WTI by 4% — before sellers returned as the session cooled.

The retreat reflects a market caught between genuine supply anxiety and the absence of confirmed physical disruptions to oil flows.

The Ceasefire That Came Undone

Monday’s jump was triggered by a dramatic deterioration in the fragile U.S.-Iran truce. Iranian drones and missiles struck the United Arab Emirates, while Washington confirmed it had sunk Iranian vessels in the Strait of Hormuz. The strait is one of the world’s most critical energy chokepoints, carrying roughly a fifth of global oil supply.

U.S. President Donald Trump warned on Fox News that Iran would face catastrophic consequences if it continued targeting ships. He also referenced a South Korean cargo vessel reportedly struck in the waterway, publicly calling on Seoul to join protective operations there.

Goldman Sounds Alarm on Regional Shortages

Analysts at Goldman Sachs flagged in a Monday note that while aggregate global oil inventories remain above emergency levels — sitting near 101 days of demand — the headline figure obscures acute shortages forming in specific markets. The bank warned that refined product buffers, particularly naphtha, LPG, and jet fuel, are being drawn down rapidly. Stocks could fall to approximately 98 days of demand by end of May. Goldman specifically identified South Africa, India, Thailand, and Taiwan as markets facing elevated scarcity risk.

Chevron Chief Warns of Getting Fuel, Not Just Paying for It

Chevron CEO Mike Wirth sharpened the concern beyond price. Speaking at the Milken Institute Global Conference, Wirth told CNBC that the question in some regions is no longer what crude costs but whether fuel can be secured at all. He said the effects of tight supply would become increasingly visible over the coming weeks as constraints work through the broader system.

Markets remain acutely sensitive to any signal that the strait could face prolonged closure. With diplomatic off-ramps narrowing, traders are weighing a scenario where physical shortages, not just price spikes, define the next phase of the crisis.

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