Oil prices today (May 12): Crude oil is at $105 as Donald Trump says peace talks on ‘life support’. What do the experts say?

Oil prices edged higher on Tuesday, extending gains for a second straight session, as prospects for a resolution to the conflict between the United States and Iran remained uncertain, with concerns over global crude supplies firmly in focus.

US President Donald Trump said on Monday that the truce with Iran was “on life support”, citing disagreements on several key issues, including stopping hostilities on all fronts, lifting the US naval blockade, resuming Iranian oil exports and compensation for war-related losses.

Crude Oil Price on May 12

Brent crude futures were up 30 cents, or 0.29%, at $104.51 a barrel, while U.S. West Texas Intermediate was up 31 cents, or 0.32%, at $98.38 by 0002 GMT. Both benchmarks rose around 2.8% on Monday.

In an effort to calm markets, the Trump administration said on Monday it would release 53.3 million barrels of crude from the US Strategic Petroleum Reserve through loans to refiners and suppliers.

Market attention now turns to President Trump’s visit to China this week. Experts say the hope is to persuade Beijing to leverage its influence over Iran to push for a broader ceasefire and resolution of the ongoing standoff in the Strait of Hormuz.

Separately, the Wall Street Journal reported on Monday that the UAE had carried out military strikes inside Iran, including an attack on a refinery located on Lawan Island in early April. The UAE has reportedly not publicly confirmed the operation.

Since the US and Israeli-led war against Iran began on February 28, Brent and WTI crude prices have jumped more than 40%. Citi said in a note that if the talks between Washington and Tehran continue to face obstacles, oil prices are likely to remain volatile and could rise further.

Where are prices going?

According to analysts at Morgan Stanley, the global oil market is now in a “race against time” as factors preventing a sharp rise in crude prices could weaken if the Strait of Hormuz remains closed until June.

Despite the disruptions affecting nearly 1 billion barrels of oil supply, crude prices are still below the highs reached in 2022 after Russia invaded Ukraine. Analysts led by Martijn Rates said the market entered the current crisis with a strong buffer, while investors largely expected Hormuz to eventually reopen.

Morgan Stanley also cited rising US crude exports and soft Chinese imports as two key reasons why the market has so far avoided a deep supply shock. However, the brokerage warned that a prolonged shutdown of Hormuz could tighten global supplies again if the disruption lasts longer than China or the United States can comfortably manage.

Hatong Futures said the market remains nervous, warning that the ceasefire may only be temporary. The company added that stalled talks between the US and Iran could further escalate tensions and push up oil prices.

An extended shutdown of the Strait of Hormuz could disrupt global crude flows by about 20 million barrels per day, Nuwama Institutional Equities said. In such a scenario, the brokerage said oil prices could potentially rise to between $110 and $150 per barrel.

Saudi Aramco CEO Amin Nasser warned on Monday that the disruption of shipments by Hormuz could delay the return of stability to oil markets until 2027, potentially affecting oil supplies by about 100 million barrels per week.

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