Crude Realities
The Week Ahead - May 11, 2026
There is nothing more bullish from a technical standpoint than a new all-time high for the S&P 500, and we logged our 15th of this year for the index on Friday, as stocks continued to rebound last week from the war-induced correction in March. New all-time highs aside, I still sense that macroeconomic conditions and geopolitical developments are being viewed through rose-colored AI glasses. While positive in aggregate, there are cracks appearing in the data and indications of more to come this summer. Furthermore, despite repeated reports from the Trump administration that we are on the cusp of a “deal” to end the war with Iran, it looks like very little progress is being made. Regardless, those assertions led the price of WTI crude oil to briefly fall below $90.
Last week, the President’s one-page proposal to end the war lifted investors spirits, but Iran’s reply over the weekend looks like a continuation of the status quo—stalemate. It is hard to imagine Iran would agree to the 14-point memorandum, given that the regime continues to fire missiles and drones at its neighbors and counterattack US efforts to enforce the blockade. Israeli Prime Minister Benjamin Netanyahu has also said that Iran’s stockpile of enriched uranium must be recovered before the war can be considered over. Supposedly, there is a ceasefire in force between all parties, but you would never know it given the constant attacks between all parties involved. The stock market is looking past the mayhem for now.
This has set the stage for a economic ticking time bomb that doesn’t seem to concern US investors. With no clear path to ending the conflict and reopening the Strait of Hormuz, global oil reserves continue to be drawn down, and shortages of critical materials, including fertilizer, run the risk of very serious longer-term consequences for the global economy that will eventually reach our shores. According to Shell CEO Wael Sawan, the global economy is facing a supply shortage of approximately 1 billion barrels of oil that is worsening by the day. The world consumes approximately 100 million barrels of oil per day, but production is falling well short, which is reducing stockpiles by 11-12 million barrels every 24 hours.