Oil Pulls Back as U.S.-Iran Tensions Rattle Strait of Hormuz

CNBC reported Tuesday that oil prices retreated after a powerful Monday session, as traders weighed the risk of sustained supply disruptions through the Strait of Hormuz.

Brent crude for July delivery fell 0.60% to $113.77 per barrel. U.S. West Texas Intermediate dropped 1.35% to $105.06 per barrel. Both benchmarks had surged roughly 4% to 6% on Monday alone.

Ceasefire on the Brink

The pullback follows a sharp escalation in the Middle East. Iranian drones and missiles struck the United Arab Emirates on Monday. Washington simultaneously confirmed it had sunk Iranian vessels inside the Strait of Hormuz. A ceasefire that had appeared fragile for weeks now looked close to collapse.

President Donald Trump issued a stark warning via Fox News, stating Iran would be “blown off the face of the earth” if it targeted U.S. ships protecting commercial traffic through the strait. Trump also posted on Truth Social that a South Korean cargo vessel had come under fire in the waterway, urging Seoul to join the protection mission.

Supply Buffers Thinning Fast

Goldman Sachs analysts flagged mounting pressure on global refined-product inventories in a Monday note. Total world oil stocks, covering crude and refined products held onshore and at sea, currently sit around 101 days of demand. That figure could fall to 98 days by the end of May. While both readings remain above emergency thresholds, Goldman warned the aggregate masks sharper regional stress. South Africa, India, Thailand, and Taiwan face elevated risk of product scarcity, analysts said. Petrochemical feedstocks such as naphtha and LPG, along with jet fuel, are being drawn down most rapidly.

Executives Sound the Alarm

Chevron CEO Mike Wirth said fuel availability was becoming a genuine concern in parts of the world. Speaking at the Milken Institute Global Conference, Wirth told CNBC the issue had moved beyond price. He said the real question in some regions was whether fuel could be obtained at all. Wirth added that supply effects would ripple through global systems over the coming weeks as the strait remains closed to normal traffic.

What Comes Next

Markets are now watching whether Washington and Tehran can stabilize the situation before physical supply chains feel a sharper squeeze. Goldman’s warning about localized shortages suggests price volatility will stay elevated even if headline inventory levels look manageable. Any further military exchange near Hormuz, through which roughly 20% of global oil supply flows daily, could reverse Tuesday’s modest retreat quickly.

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