WTI crude oil is trading at $90.54/bbl on NYMEX, down 2.69% in a volatile session. Prices have risen from below $60/bbl at the start of 2026 to near $100/bbl in May, driven almost entirely by the geopolitical supply shock from the US-Israeli military conflict with Iran and the effective closure of the Strait of Hormuz.
The Strait of Hormuz closure is the dominant price driver in the oil market. An estimated 14.5 million barrels per day of Middle Eastern crude and refined products have been removed from normal trade channels, representing approximately 15% of global seaborne oil trade. This is the largest supply disruption since the 1990 Gulf War.
The EIA's Short-Term Energy Outlook projects WTI averaging in the mid-to-upper $90s through Q3 2026 before moderating toward the low $80s by year-end. The EIA's base case assumes the conflict does not escalate further and that some supply normalization begins in Q4.
Before the crisis, most institutional forecasts saw WTI averaging $55-65/bbl in 2026, reflecting expectations of OPEC+ unwinding cuts and non-OPEC supply growth. The geopolitical premium currently embedded in prices is estimated at $25-35/bbl: the difference between where oil would trade based on fundamentals alone and where it trades today with the disruption.
OPEC+ output fell by approximately 1.74 million barrels per day in April alone, reaching its lowest since mid-2020. The group has been managing supply cautiously, but the Hormuz disruption has effectively done the work of production restraint for them. OPEC's May report cut its 2026 global demand growth forecast to 1.17 million barrels per day.
WTI at $90.54/bbl carries a large geopolitical risk premium that could unwind rapidly if Hormuz flows normalize. Buyers should avoid locking in full H2 volumes at current elevated levels. Use shorter-duration contracts (1-2 months) with a decision point before OPEC+'s next meeting. Consider options-based hedging to capture any downside while maintaining upside protection.