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Oil Prices Surge to $105 as Fragile US-Iran Ceasefire Weakens and Strait of Hormuz Stays Blocked

Shourya Jha | May 12, 2026 2:19 PM CST

Global oil prices climbed sharply on Tuesday morning, which left the investors increasingly worried that the fragile peace in West Asia is about to shatter.

Brent crude futures for July delivery rose to $105.14 per barrel. Meanwhile, US West Texas Intermediate (WTI) hovered near $99. The jump comes after President Donald Trump rejected a peace proposal from Tehran, calling the current ceasefire "unbelievably weak."

Hormuz

The world is now facing a massive supply gap. The Strait of Hormuz handles about one-fifth of the world’s oil and gas. It has been mostly shut for more than 10 weeks. Saudi Aramco CEO Amin Nasser warned that the market is losing 100 million barrels of supply every week. He cautioned that if the blockade continues into June, the global energy crisis could last until 2027. While the US has released 53 million barrels from its Strategic Petroleum Reserve (SPR), the move has provided only temporary relief to the markets.

India Braces for Impact

For India, the stakes are very high. The country imports nearly 90% of its oil. Rising prices are already hitting the economy.

Prime Minister Narendra Modi has appealed to citizens to conserve energy. The government is pushing for more public transport use and "Work From Home" setups to save foreign exchange. Official data shows India currently has 60 days of crude oil and 45 days of LPG in its rolling stock.

Oil Companies

While retail petrol and diesel prices have remained steady, Indian Oil Marketing Companies (OMCs) are bleeding cash.

Daily Losses: OMCs are reportedly losing up to ₹1,000 crore every day.
Total Under-recovery: Losses for this quarter alone are expected to hit ₹1,00,000 crore.

The government has so far ruled out a bailout package for these firms. This has led to a sell-off in energy stocks on the Indian exchanges.

The oil shock is also rattling the stock market. High crude prices usually lead to a weaker Rupee and higher inflation. Foreign Portfolio Investors (FPIs) pulled out ₹8,437 crore from Indian equities on Monday alone.