Brent crude sees sharp volatility as traders reassess supply reliability amid Strait of Hormuz disruptions and potential U.S.-Iran deal.
Energy markets in May abandoned the assumption that geopolitical disruptions are temporary, instead pricing them as structural risks. The Strait of Hormuz emerged as the dominant driver, with rising tensions over shipping disruptions and naval activity pushing oil prices higher throughout the month.
By late May, reports of a potential U.S.-Iran agreement triggered a reversal, sending Brent crude toward its worst monthly performance since 2020. Traders shifted focus from immediate supply threats to the possibility of resolved tensions, highlighting the market’s sensitivity to both disruption and resolution.
The broader reassessment included tighter inventories, altered trade flows, and renewed urgency in LNG markets. Analysts noted the global energy system’s reduced flexibility, with supply reliability now a key concern for producers, refiners, and governments.