Brent crude jumped 3.4% to $107.77 and WTI rose 4.2% to $102.18 on May 12, 2026, after the Trump administration rejected Iran's counteroffer on terms for reopening the Strait of Hormuz — putting the ceasefire framework on the thinnest ice since hostilities began.
Both benchmarks are now up roughly 45% since fighting started on February 28, and Aramco's chief executive warned that the market will not normalize until 2027 if the strait stays shut past mid-June.
What happened
Iran submitted a counteroffer to the U.S. ceasefire framework over the weekend that included conditions on Hormuz shipping-lane governance that Washington declined to accept, per CNBC's May 12 report. The rejection sent Brent through $107 for the first time since early March, according to Bloomberg's May 12 oil-market analysis. Aramco CEO Amin Nasser, speaking at an industry event, said that even under an optimistic scenario, global supply chains tied to Hormuz-dependent crude will take the rest of 2026 to partially recover, and that any normalization before 2027 assumes the strait reopens by mid-June at the latest.
Why it matters
The failed counteroffer removes a near-term diplomatic off-ramp that oil traders had been partially pricing. With both Brent and WTI up 45% since the February 28 war start, the energy shock is no longer a tail risk — it is the base case, and every month the strait stays shut deepens inventory drawdowns, raises refinery input costs and makes a disinflationary pivot by the Fed harder to defend.
Market impact
Brent's move above $107 reopened technical levels not seen since the first week of the conflict. Energy equities outperformed on May 12, with XOM and CVX adding more than 2% apiece in early trading per market data. USO and BNO, the U.S. and Brent oil ETFs, both surged alongside futures. The S&P 500 gave back early gains as the market absorbed the inflation read-through, a dynamic Bloomberg flagged in its intraday energy commentary.