Developments in oil markets during 2026 reveal that the Iran–U.S. war was not merely a passing geopolitical crisis, but rather evolved into a compound shock affecting three interrelated dimensions: actual oil supplies, transportation and insurance costs, and price expectations in futures markets. The core of the crisis lies in the Strait of Hormuz, one of the world’s most strategically important energy corridors, through which roughly one-fifth of global oil supplies typically pass. Consequently, any disruption in this passage affects not only Brent and West Texas Intermediate crude prices, but also fuel prices, maritime shipping, insurance costs, inflation, and expectations for global economic growth.
The price crisis became clearly visible with the escalation of military operations at the end of February 2026 and the subsequent actual disruption of maritime traffic through the strait. According to data from the U.S. Energy Information Administration, Brent crude began the year at approximately USD 61 per barrel, before ending the first quarter near USD 118 per barrel, marking one of the largest real price surges since the late 1980s. Brent also exceeded the USD 100 threshold in March, reached a peak of nearly USD 138 on April 7, and averaged around USD 117 per barrel in April. This indicates that the market was not merely pricing an ordinary supply shortage, but was incorporating a substantial geopolitical and maritime risk premium.
However, what is particularly notable is that prices did not move only in an upward direction. In late May 2026, with emerging signs of negotiations or arrangements aimed at de-escalation and the gradual reopening of the strait, Brent crude declined to around USD 92 per barrel, falling by approximately 19% from the end of April. This decline does not necessarily mean that the crisis had ended; rather, it reflects the market’s high sensitivity to political news. The market had begun to move between two opposing forces: on the one hand, actual shortages in supplies and inventories; and on the other, investor expectations that a political settlement could ease restrictions on navigation and restore part of the lost supply.
On the supply side, estimates by the International Energy Agency indicate that global oil supply declined in April to around 95.1 million barrels per day, with cumulative losses since February estimated at approximately 12.8 million barrels per day. Production in Gulf countries affected by the closure or disruption of the Strait of Hormuz was also about 14.4 million barrels per day below its pre-war level. Under the agency’s baseline scenario, average global supply in 2026 may decline by about 3.9 million barrels per day to reach 102.2 million barrels per day, even assuming a gradual recovery in flows beginning in June. This demonstrates that a return of prices to pre-war levels is not merely a political matter; it also requires time to repair infrastructure, restore tanker movements, and normalize insurance and shipping contracts.
The demand side presents a more complex picture. Higher oil prices do not only increase producers’ revenues; they also place pressure on consumers, industry, aviation, and petrochemicals. The International Energy Agency expects global oil demand in 2026 to contract by about 420,000 barrels per day, reaching approximately 104 million barrels per day, with a sharper decline of 2.45 million barrels per day in the second quarter. By contrast, OPEC remains relatively more optimistic, having revised its forecast for demand growth in 2026 down to 1.17 million barrels per day from 1.38 million barrels per day. This divergence between the IEA and OPEC is academically significant, as it reflects differing assessments of the impact of high prices and war on consumer behavior and economic activity.
The severity of the crisis is also evident in shipping and insurance markets. The cost of very large crude carriers traveling from the Middle East to China rose to record levels exceeding USD 400,000 per day at the beginning of the crisis, while liquefied natural gas shipping costs increased by more than 40%. War-risk insurance premiums also rose sharply, with some estimates indicating that insurance on a tanker’s hull could reach around 3% of the vessel’s value, equivalent to approximately USD 7.5 million for a tanker valued between USD 200 million and USD 300 million, compared with roughly USD 625,000 before the conflict. These costs are not always immediately visible in Brent crude prices, but they are gradually transmitted to the prices of petroleum products, gas, and goods transported by sea.
Navigation data further suggest that the market’s return to normal conditions may be slower than the decline in prices. Before the war, traffic through the Strait of Hormuz ranged between 125 and 140 crossings per day, whereas by late May it had fallen to only about 11 crossings per day. This means that prices may decline as a result of political optimism, while actual oil flows remain constrained. Therefore, the principal risk at the current stage is a temporary disconnect between market prices and supply realities: investors may be betting on an imminent agreement, while shipping and insurance companies continue to require security guarantees before fully resuming operations.
The Iran–U.S. war has redefined risk in the global oil market. Prices are no longer governed solely by the traditional supply-and-demand equation; rather, they have become closely linked to the degree of openness of the Strait of Hormuz, insurance costs, tanker availability, and the speed at which supplies can be offset by the United States and non-OPEC producers. In the short term, sharp volatility is likely to persist, with Brent crude fluctuating between USD 90 and USD 110 per barrel unless a clear and stable agreement is reached. In the medium term, however, a return to pre-war price levels will require the rebuilding of inventories, the restoration of confidence among shipping companies, and a decline in the geopolitical risk premium—conditions that may take several months to materialize even if military operations officially cease.
