Asian shares edged higher while crude oil prices fell more than 2% during early Asian trade on Tuesday (May 19, 2026) as US President Donald Trump announced he is holding off on military strikes against Iran. According to Reuters, Brent crude futures for July delivery dropped $3.01, or 2.7%, to trade near $109.09 per barrel during early trading hours, while US West Texas Intermediate (WTI) crude for June delivery declined $1.38, or 1.3%, to $107.28 per barrel. The more actively traded July WTI contract fell $2.06, or 2%, to around $102.32 per barrel. In India, MCX crude oil prices fell over 0.9% to ₹9,916 per barrel, tracking the global price decline. The developments come after Trump said there was a 'very good chance' the US could reach an agreement with Iran to prevent Tehran from obtaining a nuclear weapon, hours after announcing the pause in military action to allow talks. As reported by CNBC TV18, shares in Japan and Australia witnessed gains during the trading session, with the positive sentiment helping to offset earlier market pressures.
Earlier Monday, both the US and Iran said they'd rejected fresh offers as insufficient to secure a deal. As reported by CNBC TV18, the White House said a proposal delivered by Tehran through mediators Sunday lacked meaningful improvement, while Iran indicated US demands are unacceptable. Trump has repeatedly threatened renewed military action against Iran without following through, with no immediate confirmation from Tehran of renewed talks. However, the latest developments suggest that optimism about possible talks between the US and Iran is now driving market sentiment, with Asian stocks getting a significant boost from hopes for renewed negotiations. According to Reuters, Iranian Foreign Ministry spokesperson Esmaeil Baghaei confirmed on Monday that Tehran's position had been conveyed to the US via Pakistan but provided no further details. A Pakistani official reportedly stated that Islamabad had facilitated a fresh proposal between both sides, though progress in negotiations remained slow. Crude oil prices briefly trimmed gains on Monday after Iran's semi-official Tasnim News Agency reported that Washington had proposed a temporary exemption from oil sanctions until a final agreement is reached.
Bonds from Tokyo to New York extended losses as rising energy prices from the Middle East war fueled inflation fears and increased expectations of global rate hikes, according to Reuters. Higher oil prices and inflation concerns have rattled bond markets, sending yields from Japan to the US sharply higher. As reported by CNBC TV18, thirty-year Treasury yields hovered near the highest levels in almost three years as investors weighed fears of persistent inflation against optimism that the US and Iran may eventually reach a deal to end hostilities. However, US futures were mixed and bond yields nudged up slightly, showing investors are still keeping an eye on inflation linked to oil prices despite the positive geopolitical developments. According to Reuters, a record 9.9 million barrels were drawn from the Strategic Petroleum Reserve last week, bringing stockpiles down to about 374 million barrels, the lowest point since July 2024. The International Energy Agency (IEA) chief Fatih Birol stated that commercial oil inventories were falling rapidly due to disruptions in shipping and heightened geopolitical risks, with current inventories suggesting only a few weeks of supply remain available if disruptions intensify further.
In stocks, Monday's decline marked the first back-to-back drop for the S&P 500 this month, with rising government bond yields, hotter-than-expected inflation readings and elevated oil prices all combining to dent investors' appetite. According to CNBC TV18, equity-index futures tied to Wall Street benchmarks fluctuated in Asian trading, after the underlying gauges rebounded from session lows in choppy trading, with a gauge of semiconductor stocks falling 2.5%. However, Asian stocks got a boost, especially in Japan and Australia, thanks to optimism about possible talks between the US and Iran, with the positive sentiment helping to offset some of the earlier market pressures. As reported by Reuters, four analysts polled by Reuters estimated, on average, that US crude inventories fell by about 3.4 million barrels in the week that ended on May 15, with official data from the Energy Information Administration scheduled for release on May 20. Oil prices have been trading higher amid uncertainty surrounding the talks and concerns that a near-complete shutdown of the Strait of Hormuz could further disrupt Persian Gulf energy supplies.
Market experts remain cautiously optimistic about oil price trajectories despite the recent decline. Kaynat Chainwala, AVP - Commodity Research at Kotak Securities, said that barring a ceasefire breakthrough that meaningfully restores Hormuz flows, oil prices are likely to remain volatile and elevated. "In the short term, WTI crude is likely to face key resistance at $112, and a breakout above this level could drive prices towards $120. On the downside, support is placed at $102. Meanwhile, Brent crude has resistance at $115, and a sustained rise beyond this mark may lift prices past $125, with support seen at $104," Chainwala stated. From a technical perspective, Ponmudi R, CEO of Enrich Money, noted that MCX Crude Oil opened with a strong gap-up and continues to trade above the ₹10,300 mark, reclaiming earlier highs while maintaining support above the ascending trendline pattern. "Immediate resistance is placed in the ₹10,450– ₹10,500 range, and a sustained breakout above this zone may further strengthen the rally, taking prices towards ₹10,600– ₹10,800. On the lower side, immediate support is seen at ₹10,200– ₹10,100, and a breach below this range could drag prices down to ₹9,850– ₹9,800," he added. The short-term outlook remains cautiously positive amid persistent supply concerns in the Strait of Hormuz.
