Oil Prices Rise 2% to Two-Week High on Iran War Supply Concerns

Oil prices climbed about 2% to a two-week high on May 18 as traders focused on the risk of supply disruption from the Iran war.

Reuters reported that the rally came despite a separate report that the U.S. had agreed to waive sanctions on Iranian crude during talks. The market move pointed to how quickly traders are repricing the risk of tighter supplies from the region.

AP also reported sharp swings in oil trading and broader market volatility tied to uncertainty over the war in Iran and the Strait of Hormuz, a critical shipping route for crude exports.

The latest price action comes against a backdrop of continued U.S. pressure on Iran's oil trade. The Treasury Department said on May 11 that it was designating entities tied to the IRGC's sale and shipment of Iranian oil and would keep pressuring the regime's oil revenue streams.

At the same time, the Office of Foreign Assets Control has also issued Iran-related general licenses, including one on March 20 that authorized delivery and sale of certain Iranian-origin crude oil and petroleum products already loaded on vessels as of that date.

The conflicting signals underscore the uncertainty hanging over the oil market: traders are balancing the risk of war-driven supply disruptions against the possibility of sanctions relief or licensing changes that could ease flows of Iranian crude.