Brent Back Above $103 as Iran Rejects U.S. Peace Proposal; Tankers Slipping Through Hormuz With Trackers Off, Trump-Xi Beijing Summit Wednesday

Monday, May 11, 2026

Brent (July) $103.78 | WTI (June) $97.66 Brent +2.49 (+2.5%), WTI +2.24 (+2.3%), session highs $105.99 and $100.37.

Both contracts down 6% last week on peace deal optimism now reversed. Trump calls Iran's MOU response unacceptable; three crude tankers exit Hormuz with trackers switched off; Trump-Xi summit Wednesday with Iran on agenda; Aramco CEO says world has lost 1 billion barrels, reopening routes not same as normalizing market; Diamondback hedges U.S. export ban risk.

Bottom Line

Trump calling Iran's response to the 14-point MOU unacceptable over the weekend closes the diplomatic window that last week's 6% price decline was pricing open. The pattern is now well established: peace headline produces a large selloff, Iran's actual response or behavior contradicts the headline, prices recover. Vanda Insights has called this correctly every time - the administration oversells the thaw, the market buys it, the rebound is gradual and incomplete. Last week's 6% loss is this week's buying opportunity for anyone who has been watching the physical supply picture.

Aramco CEO Amin Nasser's statement is the most important market commentary of the morning and it deserves to be read carefully. "Reopening routes is not the same as normalizing a market that has been deprived of about one billion barrels of oil." That framing directly contradicts Trump's repeated assertion that prices will drop quickly once the conflict ends. Nasser is describing a structural supply hole that takes months to refill, compounded by years of underinvestment that left global inventories with no cushion to absorb a shock of this magnitude. He is also flagging that even Aramco's East-West Pipeline - the critical lifeline that has been carrying Saudi crude to Yanbu throughout the conflict - is operating under strain with no easy backup.

The tankers slipping through Hormuz with trackers switched off is the physical market finding its own workaround. Three VLCCs carrying Iraqi and UAE crude successfully transited last week and Sunday, with the Agios Fanourios I carrying 2 million barrels of Basrah Medium to Vietnam after at least two previous failed attempts. This is not a reopening -- it is individual vessels taking calculated risk in the dark, which is precisely the kind of fragile, uninsured, untraceable flow that cannot scale into the commercial volumes the market needs. War risk insurance for vessels transiting without trackers is effectively unavailable, which means the buyers of these barrels are accepting cargo that may be uninsurable and the tanker owners are assuming liability they cannot easily hedge.

The Trump-Xi Beijing summit Wednesday is the next genuine catalyst. Bessent has urged China to use its leverage with Tehran, and Xi has an economic interest in Hormuz reopening that is as acute as anyone's – China's refinery runs are still well below pre-war levels and the country's commercial reserves are being drawn down to compensate. Whether Xi is willing to translate that economic interest into diplomatic pressure on Iran is the question. China has been careful throughout this conflict to maintain its relationship with Tehran while publicly calling for de-escalation, and there is no precedent for Beijing delivering a decisive intervention in a U.S.-Iran negotiation. The summit is an opportunity, not a guarantee.

Diamondback's $70 million bet against the WTI-Brent spread is the canary in the coal mine for U.S. export policy risk. A Permian producer hedging a WTI discount to Brent of $41 to $43 per barrel -- a level that would only be reached in an export ban scenario -- signals that the largest U.S. independent producers are taking the political risk of export restrictions seriously enough to pay for protection. With midterm elections in November and U.S. gasoline above $4.50 per gallon, the political logic of an export ban will only intensify as summer driving season peaks.

Top Developments

Trump Calls Iran's MOU Response Unacceptable, Conflict Enters Week 11

Trump said Sunday that Iran's response to the 14-point MOU peace proposal was unacceptable, reversing the optimism that drove last week's 6% price decline and pushing Brent back above $100. The Hormuz strait remained largely closed with no commercial oil tanker traffic operating openly. Trump is scheduled to arrive in Beijing Wednesday for a summit with Xi Jinping where Iran and Hormuz are expected to be on the agenda alongside trade issues. U.S. officials have urged China to use its diplomatic leverage with Tehran to accelerate a resolution, with Treasury Secretary Bessent having made that request explicitly ahead of the summit. ANZ analysts expect Brent to remain above $90 through 2026 and $80 to $85 into 2027 as demand growth resumes and inventories are gradually rebuilt.

Three Tankers Transit Hormuz With Trackers Off, Iraqi and UAE Crude Moving

Three VLCCs carrying crude exited the Strait of Hormuz last week and Sunday with AIS transponders switched off to avoid Iranian targeting, per Kpler and LSEG shipping data. Two vessels -- the Agios Fanourios I and the Kiara M -- each carrying approximately 2 million barrels of Iraqi Basrah crude, passed through Sunday. The Agios Fanourios I is bound for Vietnam's Nghi Son refinery after at least two previous failed transit attempts since loading on April 17. The Kiara M's destination was not immediately confirmed. A third VLCC, the Basrah Energy, carried 2 million barrels of ADNOC Upper Zakum crude through the strait on May 6, offloading at Fujairah terminals May 8. ADNOC and its buyers have been making selective attempts to move stranded Gulf crude through the strait. The tracker-off transits represent individual vessels accepting uninsured risk rather than a systematic reopening.

Aramco CEO: World Has Lost 1 Billion Barrels, Normalization Takes Time

Saudi Aramco CEO Amin Nasser said Sunday the world has lost approximately 1 billion barrels of oil over the past two months and that energy markets will take time to stabilize even after flows resume, describing the East-West Pipeline to Yanbu as a critical lifeline during the crisis. Aramco reported a 25% jump in first-quarter net profit. Nasser said reopening routes is not the same as normalizing a market deprived of that volume, and flagged that years of underinvestment have compounded the strain on already-depleted global inventories. Saudi crude exports to China are expected to fall further in June as buyers cut nominations due to high OSPs and constrained supply availability.

Diamondback Hedges U.S. Export Ban Risk With $70 Million Spread Bet

Permian Basin producer Diamondback Energy purchased put options for nearly $70 million to sell the WTI-Brent price spread at approximately minus $42 per barrel for up to 290,000 bpd through Q3 2026 -- a hedge that only pays out if U.S. crude exports are banned or severely restricted, which would cause WTI to collapse relative to Brent. It is the first time since 2022 that Diamondback has used this instrument. Energy Aspects' Tim Skirrow said in a normal market the probability of payout is very low, but with midterm elections approaching and gasoline above $4.50 per gallon, the political risk of an export ban is real enough for the largest Permian-only producer to pay for protection against it. Japan received its first Central Asian crude cargo since the war began on Monday, a tanker of Azerbaijani crude, as buyers across Asia continue to diversify away from unavailable Middle Eastern supply.