Oil Markets Surge as Hormuz Crisis Deepens

Oil markets stayed firmly in focus last week as investors continued to navigate the fallout from the Iran conflict and the effective disruption of traffic through the Strait of Hormuz.

After briefly easing on hopes of a fragile ceasefire between the United States and Iran, crude prices resumed their advance at the start of May following reports that a tanker had been struck by projectiles near the strait. The incident came shortly after President Donald Trump announced “Project Freedom,” a US-led initiative designed to escort civilian vessels through the contested waterway and restore limited shipping activity.

Iran responded by warning that any foreign military presence in the strait would face retaliation and cautioned commercial tankers against operating without coordination from its forces, highlighting the continued fragility of global energy flows.

The geopolitical backdrop has transformed oil into the central macro driver of 2026 markets. Since the conflict began on February 28, crude prices have surged nearly 60%, with the closure of Hormuz disrupting roughly one-fifth of global oil trade.

By Monday, WTI crude had climbed back above $102 per barrel while Brent approached $109, extending a rally that has repeatedly reignited inflation concerns across developed economies.

OPEC+ Struggles to Stabilize the Market

At the same time, oil markets are facing growing uncertainty around supply coordination.

OPEC+ announced another modest production increase for June, describing the move as a cautious effort to maintain market stability. Yet the announcement carried limited practical impact given the scale of current supply disruptions.

The timing was particularly notable as it followed the abrupt departure of the United Arab Emirates from the group — a move that raised broader questions about the cartel’s long-term cohesion. Analysts increasingly view the UAE’s exit as both a geopolitical signal and a strategic shift toward closer alignment with Western energy markets.

While OPEC+ continues to present a united front, the reality is that much of the cartel’s production capacity remains constrained by the ongoing conflict and shipping bottlenecks.

Inventory data has further reinforced the tightening supply narrative. US crude stockpiles fell sharply last week while exports surged above 6 million barrels per day, underscoring the pressure on global energy markets as refiners and importers scramble to secure supply.

The result has been renewed inflation anxiety. Higher gasoline and refined fuel prices are feeding directly into broader macro expectations, complicating the outlook for central banks already facing persistent price pressures earlier this year.

Energy and Oil ETFs Continue to Attract Flows

European energy ETFs reflected the continued strength in commodity markets last week.

Broad energy-sector ETFs gained 3.12% week-over-week and are now up more than 34% year-to-date, supported by nearly $2.7 billion in cumulative inflows during 2026.

The largest allocations continued flowing into diversified energy equity exposure. The iShares S&P 500 Energy Sector UCITS ETF (IUES), now managing more than $1.7 billion in assets, rose 3.26% during the week while attracting over $411 million in fresh inflows. The iShares MSCI World Energy Sector UCITS ETF (5MVW) posted a similar gain of 3.52%, extending its year-to-date return above 32%.

Commodity-linked oil products experienced even stronger momentum. The WisdomTree Brent Crude Oil ETC (BRNT) climbed 11.34% last week and has now more than doubled in value year-to-date, reflecting Brent’s outsized sensitivity to Middle Eastern supply disruptions. Meanwhile, the WisdomTree WTI Crude Oil ETC (CRUD) gained 8.99% and attracted more than $200 million in weekly inflows despite remaining negative on a year-to-date flow basis.

Exploration and production equities also participated in the rally. The iShares Oil & Gas Exploration & Production UCITS ETF (IOGP) advanced 4.58% over the week, supported by expectations that sustained high crude prices could continue boosting upstream profitability.

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Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.