By Giulia Petroni
Here's a look at what happened in oil markets in the week of May 4-8 and what the focus will be in the days to come.
OVERVIEW: Oil prices are on track for a weekly loss of nearly 7% as traders await updates on U.S.-Iran negotiations after the two sides exchanged fire, threatening an already fragile truce. In afternoon European trading, Brent crude for July delivery was at $100 a barrel, while West Texas Intermediate futures for June were at $95 a barrel.
MACRO: The conflict in Iran and the resulting spike in oil prices have heightened concerns over inflation and higher interest rates for longer.
Meanwhile, the latest data showed the U.S. added 115,000 jobs in April, far exceeding expectations, while the unemployment rate stayed unchanged at 4.3%. The full impact of the war and higher energy costs on the labor market has yet to materialize, as companies typically plan hiring months in advance, meaning changes in demand are reflected with a delay.
GEOPOLITICAL RISKS: President Trump said the cease-fire with Iran is still in effect after Iran launched missiles, drones and small-boat attacks at U.S. warships transiting the Strait of Hormuz. The two sides are working with mediators to formulate a memorandum of understanding to restart negotiations aimed at ending the conflict, with talks potentially beginning next week in Pakistan.
Renewed clashes between Washington and Tehran, however, underscore the fragility of the situation and heighten concerns about a prolonged supply shock in the region if no agreement is reached soon. As a result, oil markets remain highly volatile, with a persistent geopolitical risk premium reflecting uncertainty over Strait of Hormuz flows and the potential stability of any deal.
SUPPLY AND DEMAND: Oil inventories and emergency reserves are rapidly depleting, raising the risk of supply shortages. Even in the event of an agreement, oil prices are likely to fall only modestly, as the situation remains fundamentally unstable and regional production and exports will recover only gradually.
Meanwhile, U.S. exports of oil products reached a record 8.2 million barrels per day last week, according to the latest data. This is helping to partially offset supply losses from the Gulf region--a situation particularly critical for European and Asian refineries cut off from Persian Gulf crude via Hormuz. Demand in both regions for U.S. refined products, including diesel, jet fuel, and gasoline, is rising.
U.S. commercial crude-oil stocks, excluding the Strategic Petroleum Reserve, fell by 2.3 million barrels to 457.2 million barrels in the week ended May 1. Oil held in the SPR dropped by 5.2 million barrels to 392.7 million barrels, as the Energy Department continued emergency releases in response to the loss of Middle East supply.
WHAT'S AHEAD: Oil markets are expected to remain highly headline-driven, with the recent escalation reinforcing the geopolitical risk premium. With flows through the Strait of Hormuz unlikely to normalize any time soon, prices remain vulnerable to further spikes, according to market watchers.
New monthly reports from the three major energy agencies--OPEC, the EIA and the IEA--are expected to provide deeper insights into the fundamental effects of the oil market, with supply and demand forecasts likely to be revised, analysts at Commerzbank said. In April, the IEA had assumed that disruptions would be limited to the second quarter, leaving second-half forecasts largely unchanged. However, the longer Hormuz remains effectively closed, the more persistent the impact on prices is likely to be.
Meanwhile, a series of Chinese economic releases are on next week's agenda, with April crude oil import data particularly important for assessing demand trends.
On the economic front, markets will closely watch U.S. inflation and labor data, with the release of the consumer price index, the producer price index, and weekly jobless claims expected to provide fresh insights into economic momentum and potential policy moves.
Write to Giulia Petroni at giulia.petroni@wsj.com
(END) Dow Jones Newswires
May 08, 2026 09:02 ET (13:02 GMT)
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