Crude oil prices experienced one of the most volatile trading weeks of 2026 during the period of May 3 through May 7, as traders reacted to the ongoing U.S.-Iran conflict, disruptions in the Strait of Hormuz, and sudden changes in diplomatic negotiations. June West Texas Intermediate (WTI) crude futures swung violently between a high of $107.46 and a low of $88.66 before stabilizing near $97 a barrel by the end of the week. The sharp price swings reflected how sensitive the market remains to supply disruptions and geopolitical headlines.
Strait of Hormuz Crisis Fuels Market Panic
The biggest driver behind the rally early in the week was the continued closure of the Strait of Hormuz, one of the world’s most important oil shipping routes. Roughly 20% of global seaborne crude oil passes through the narrow waterway, and its disruption created fears of a severe global supply shortage.
Tensions escalated sharply on Monday after Iran launched missiles and drones targeting the United Arab Emirates near the key oil export hub at Fujairah. At the same time, U.S. naval forces intensified operations aimed at restoring commercial shipping through the strait. The combination of military escalation and fears of additional attacks triggered aggressive buying in crude oil futures.
Traders rushed into the market as concerns grew that the conflict could remove millions of barrels per day from global supply. Energy executives also warned that shortages were becoming more…
Crude oil prices experienced one of the most volatile trading weeks of 2026 during the period of May 3 through May 7, as traders reacted to the ongoing U.S.-Iran conflict, disruptions in the Strait of Hormuz, and sudden changes in diplomatic negotiations. June West Texas Intermediate (WTI) crude futures swung violently between a high of $107.46 and a low of $88.66 before stabilizing near $97 a barrel by the end of the week. The sharp price swings reflected how sensitive the market remains to supply disruptions and geopolitical headlines.
Strait of Hormuz Crisis Fuels Market Panic
The biggest driver behind the rally early in the week was the continued closure of the Strait of Hormuz, one of the world’s most important oil shipping routes. Roughly 20% of global seaborne crude oil passes through the narrow waterway, and its disruption created fears of a severe global supply shortage.
Tensions escalated sharply on Monday after Iran launched missiles and drones targeting the United Arab Emirates near the key oil export hub at Fujairah. At the same time, U.S. naval forces intensified operations aimed at restoring commercial shipping through the strait. The combination of military escalation and fears of additional attacks triggered aggressive buying in crude oil futures.
Traders rushed into the market as concerns grew that the conflict could remove millions of barrels per day from global supply. Energy executives also warned that shortages were becoming more serious. Chevron CEO Mike Wirth stated that the issue was no longer just high prices, but whether physical fuel supplies would remain available. ExxonMobil CEO Darren Woods added that the market still had not fully priced in the scale of the supply disruption.
The market reaction was immediate. WTI crude surged above $106 a barrel, reaching the highest level of the week as buyers scrambled to secure supplies.
Forecast Changes After Surprise Peace Negotiations
The tone of the market shifted dramatically in the middle of the week after reports surfaced that the United States and Iran were discussing a possible peace agreement. News reports indicated that negotiators had drafted a framework that could reopen the Strait of Hormuz, pause military operations, and ease sanctions on Iranian oil exports.
President Donald Trump also announced a temporary pause in parts of “Project Freedom,” the U.S. naval mission protecting commercial shipping routes. Traders interpreted the move as a sign that tensions could ease faster than expected.
The response in crude oil markets was historic. WTI crude plunged nearly 15% intraday on Wednesday, marking the largest one-day decline since the COVID-19 market collapse. Prices briefly fell below $89 a barrel as traders rapidly unwound positions built around supply shortage fears.
However, the selloff did not last long. Within hours, Trump warned that it was “too soon” to expect a final agreement and threatened renewed military strikes if Iran rejected U.S. conditions. Iran also demanded financial reparations for war damages, a condition Washington appeared unwilling to accept. Those comments quickly revived concerns that the conflict could continue for weeks or even months.
By Thursday, crude prices had recovered part of their losses, although the market remained well below Monday’s highs.
Projections Supported by Tight Inventories and Strong Exports
Despite the dramatic geopolitical headlines, underlying supply fundamentals remained supportive for oil prices. U.S. inventory data showed continued tightening in domestic crude and fuel supplies.
The American Petroleum Institute reported an 8.1 million barrel draw in U.S. crude inventories for the week ending May 1, far larger than analysts expected. The Energy Information Administration later confirmed another weekly decline in commercial crude stocks, while gasoline and distillate inventories also moved lower.
The inventory declines reflected strong export demand as global buyers searched for alternatives to Middle Eastern crude supplies. U.S. crude and petroleum exports surged to near-record levels, with total shipments approaching 13 million barrels per day. American refiners also increased jet fuel production sharply as Europe and Asia sought replacement supplies.
These developments showed that the global oil market remains structurally tight even during periods of heavy price selling. Physical demand for crude oil products continues to stay strong, particularly as disruptions in the Persian Gulf force importers to secure barrels from the United States and other producers outside the region.
Weekly Light Crude Oil Futures
Trend Indicator Analysis
The main trend is up according to the weekly swing chart and moving average analysis. Despite the volatility the past ten weeks, sellers have not been able to take out any significant bottoms, which is helping to keep the uptrend intact. A trade through $110.93 will signal a resumption of the uptrend. A sustained trade under $78.97 will shift momentum to the downside.
The 52-week moving average is $67.10, and the nearest main bottom is at $55.12. Since these levels are not likely to be taken out over the near-term, the market will remain in “buy the dip” mode until the trend changes to down.
The short-term range is $78.97 to $110.93. Its retracement zone at $94.95 to $91.18 is support. The long-term range is $55.12 to $110.93. Its 50% to 61.8% retracement zone is $83.02 to $76.44.
There are upside objectives at $117.63 and $119.48. These are previous nearby futures tops. The next two tops at $123.00 and $130.50 are from the start of the Russia-Ukraine War.
The potential support areas look for structured than the tops, which suggests a floor is forming that could provide support even after the war ends. The previous tops were all formed by speculative spikes that were gone in a flash. This suggests that trying to pick an eventual top will be a difficult task.
Weekly Technical Forecast
The direction of the Weekly June Crude Oil futures contract for the week ending May 15 is likely to be determined by trader reaction to $94.95 and $91.18.
Bullish Scenario
A sustained move above $94.95 will signal the presence of buyers. This move could create the upside momentum needed to challenge $110.93 to $117.63.
Bearish Scenario
A sustained move under the pivot at $91.18 will indicate the presence of sellers. This could create the downside pressure needed to retest the retracement zone at $83.02 to $76.44.
Oil Prices Forecast for Next Week
The crude oil market enters next week facing a highly unstable balance between geopolitical risk and hopes for diplomacy. Traders will continue watching every headline related to U.S.-Iran negotiations and shipping activity in the Strait of Hormuz.
If peace discussions break down or new attacks occur near Gulf oil infrastructure, WTI crude could quickly retest resistance near this week’s highs above $100 a barrel. The market remains vulnerable to sudden supply shocks because global inventories are already tightening and export demand remains elevated.
On the other hand, any confirmed agreement that restores normal shipping through the Strait of Hormuz could pressure prices sharply lower as fears of supply shortages ease. In that scenario, crude oil could revisit support near the 50-day moving average as traders remove part of the war premium from the market.
For now, the overall outlook remains cautiously bullish because physical supply conditions are still tight, inventories continue to fall, and global demand for replacement crude supplies remains strong. However, traders should expect another week of unusually large price swings as geopolitical headlines continue to dominate the oil market.
Technically, the steep sell-off led to a test of the key support zone at $94.95 to $91.18. Sellers pierced the bottom to $88.66, but buyers came in quickly to drive the market back over the zone. This price action reestablished the support. It also supported our assessment that longer-term traders are going to remain in buy-the-dip mode until the market closes under the 52-week moving average, currently at $67.11.
Additionally, I’d like to see a top actually formed, which means I’d like to see a series of lower tops or some kind of distributive chart pattern before I can declare the top is in. Traders are buying weakness aggressively, too, which signals that there are major buyers in there defending against a complete washout.
