Markets Price 2 Opposing Paths as 10%-13% of Oil Supply Stays Offline
Updated
Updated · FE Trustnet · May 18
Markets Price 2 Opposing Paths as 10%-13% of Oil Supply Stays Offline
5 articles · Updated · FE Trustnet · May 18
Strategists say equities are discounting both an AI-driven earnings boom and a worsening energy shock, leaving buoyant stock indexes increasingly detached from a fragile economic backdrop.
AI enthusiasm has strengthened since March as agentic AI lifted demand expectations across chips and data centres; Nvidia H100 spot prices are up about 70%, and 2026 S&P 500 earnings forecasts have risen, though gains are narrowly concentrated.
The bigger risk is Hormuz: nearly one-fifth of global oil normally passes through the strait, inventories have fallen below 7.9 billion barrels from 8.4 billion, and 10%-13% of pre-war supply is still missing from world markets.
That squeeze is already feeding into macro forecasts, with one economist lifting 2026 US inflation by 0.1-0.2 percentage points to 3.7% and expecting no Fed rate cut this year.
Analysts warn even a reopening may not quickly normalize tanker flows, refineries or product shortages, meaning higher energy costs could keep pressuring consumers, margins and valuations into late 2026.
With AI stocks soaring and oil shocks looming, is the market's optimism a brilliant forecast or a dangerous delusion?
Can the AI revolution's productivity gains offset an economy crippled by the unprecedented Hormuz energy crisis?
As AI demands immense power, will the energy crisis force a collision between technological progress and global stability?
Brent Oil Surges to $111 Amid 2026 Strait of Hormuz Crisis: Economic Fallout and Energy Transition
Overview
In May 2026, global oil markets faced a severe shock as drone strikes hit key energy infrastructure in the UAE and Saudi Arabia, causing a fire at a UAE nuclear facility and forcing Saudi authorities to intercept more drones. This led to a major disruption in the Strait of Hormuz, pushing Brent crude prices to $111.34 per barrel and plunging the oil market into a deficit. With global oil inventories being drawn down at record speed and the deficit expected to last until late 2026, the world now faces ongoing supply shortages, price volatility, and heightened economic and geopolitical risks.