Brent crude blasted through $110 per barrel on May 13 for the first time since March 2022, closing at $110.40 as the Iran-Hormuz conflict continued to choke global oil supplies with no diplomatic resolution in sight. WTI crude settled at $105.80, also hitting multi-year highs.
The International Energy Agency released an emergency assessment showing 4.2 million barrels per day of effective supply disruption from the Hormuz closure, the largest sustained supply shock since Iraq's invasion of Kuwait in 1990. Gasoline prices at the pump have now topped $4.50 per gallon nationally, adding to the inflationary pressures captured in the day's scorching 6% PPI print.
What happened
Brent crude surged 2.6% on May 13 to close at $110.40, while WTI gained 3.1% to $105.80. The IEA's emergency report, released during European trading hours, detailed that approximately 4.2 million barrels per day of crude and refined product flows through the Strait of Hormuz are being disrupted by the ongoing Iran-U.S. conflict, which entered its 75th day on May 13. Iran-backed naval forces have been interdicting tanker traffic since late February, forcing shipments to reroute around the Cape of Good Hope, adding 10-14 days and $3-5 per barrel in shipping costs. Saudi Arabia and the UAE have partially activated their East-West pipeline bypass capacity, but can only offset roughly 1.5 million barrels per day of the disruption. Global crude inventories have drawn down for 11 consecutive weeks.
Why it matters
Oil at $110 is no longer a temporary spike -- it is becoming the new baseline for energy costs, with cascading effects across the global economy. Every $10 increase in oil prices shaves approximately 0.3% from global GDP growth according to IMF estimates. The supply disruption is feeding directly into the PPI and CPI data, making the Federal Reserve's job impossible and putting upward pressure on inflation expectations that had been partially anchored by hopes of a ceasefire.
Market impact
Energy stocks surged on the back of $110 oil. ExxonMobil (XOM) gained 3.1% to $128.50, Chevron (CVX